Auditing and Assurance revision question and answer

Auditing and Assurance Revision Questions and Answers

As an independent financial auditor, how would you deal with the enterprise which has invested a substantial amount in the shares of another company under the same management. The market price of the shares of the aforesaid company is about half of that at which these shares were acquired the enterprise. The management is not prepared to provide for the fall in the value of shares on the ground that the loss is only notional till the time the shares are actually sold.
Answer Hint:
It is necessary to provide for the fall in the value of shares if it is other than temporary auditor’s report would be necessary since the amount involved is substantial



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