Question

Which audit opinion is most likely to be issued when financial statements are prepared in accordance with U.S. GAAP?

1. qualified 2. adverse opinion 3. unqualified 4. internal control weakness

Which of the following statements about Asset retirement obligations (AROs) is false:

		AROs are measured at fair value in the balance sheet
		AROs are valued at the present value of an annuity
		AROs are offset with an increase the balance in the related asset account
		AROs are liabilities associated with the retirement or disposal of a long-term asset
		None of the above answers are false

Which of the below investments is most likely to be presented at fair value on the balance sheet?

		Equity ownership of 25% with 15% of voting rights
		Equity ownership of 50%
		Equity ownership of 100%
		Equity ownership of 15% with 25% of voting rights

Answer 1

Answer :

1. Option - C, Unqualified

Explanation : An unqualified opinion indicates that the financial records have been maintained and prepared in accordance with Generally Accepted Accounting Principles (GAAP).

2. Option - C, AROs are offset with an increase the balance in the related asset account

Explanation : Entities are require to recognize asset retirement obligations at their fair value. The amount at which an informed willing party would agree to assume the obligation.

3. Option - D, Equity ownership of 15% with 25% of voting rights

Explanation : The ownership of less than 20% creates an investment position, which is valued at historic book value or fair market value in the investor’s balance sheet.