The Statement About Inherent Risk Assessments for Property, Plant and Equipment

question 27

Multiple Choice

The statement about inherent risk assessments for property, plant and equipment that is inaccurate is:

• A) Inherent risk is normally low for the presentation and disclosure assertion for PPE assets acquired under finance leases.
• B) Inherent risk is normally low for the existence assertion in a merchandising entity because PPE assets are not generally vulnerable to theft.
• C) Inherent risk is normally moderate to high for the existence assertion in a manufacturing entity because scrapped or retired PPE assets may not be written off the books.
• D) Inherent risk is normally low for the valuation and allocation assertion when PPE assets are purchased for cash.

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Definitions:

Enantiomer

Molecules that are mirror images of each other but cannot be overlaid onto each other, much like left and right hands.

Meso Compound

A type of stereochemical isomer with multiple stereocenters that is superimposable on its mirror image, making it achiral despite containing chiral centers.

Diastereomers

Isomers that have a different spatial orientation of atoms but are not mirror reflections of each other.

Meso Form

A stereoisomer with multiple stereocenters that is superimposable on its mirror image, thus being optically inactive.