Question: Alpha & Co., CPAs has been engaged to audit the fair-value measurements of Gamma Company, a high-tech company in the northwest. During the audit, Alpha

Alpha & Co., CPAs has been engaged to audit the fair-value measurements of Gamma Company, a high-tech company in the northwest. During the audit, Alpha must obtain evidence that management of Gamma has appropriately valued the company's available-for-sale stock portfolio, which includes investments in Fortune 100 company stocks and the company's stock compensation expense, related to stock options granted to Gamma employees as valued by the Black-Scholes option-pricing model. Gamma's stock is largely held by the owners, and neither the company's stock nor the related stock options are actively traded.

  1. Summarize your audit plan for these two accounts for how Alpha can obtain assurance regarding the fair value of each of the inputs.
  2. Determine what audit procedures you believe are necessary.

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