If the auditors discover that the carrying amount of a clients investments is overstated because of a

Question:

If the auditors discover that the carrying amount of a client’s investments is overstated because of a loss in value that is other than a temporary decline in market value, they should insist that

a. The approximate market value of the investments be shown in parentheses on the face of the balance sheet.

b. The investments be classified as long term for balance sheet purposes with full disclosure in the footnotes.

c. The loss in value be recognized in the financial statements.

d. The equity section of the balance sheet separately show a charge equal to the amount of the loss.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...