An auditor’s analytical procedures indicate a lower than expected return on an equity method investment. This situation most likely could have been caused bya. An error in recording amortization of the excess of the investor’s cost over the investment’s underlying book value.b. The investee’s decision to reduce cash dividends declared per share of its common stock.c. An error in recording the unrealized gain from an increase in the fair value of available for sale securities in the income account for trading securities.d. A substantial fluctuation in the price of the investee’s common stock on a national stock exchange.
An auditor’s analytical procedures indicate a lower than expected return on an equity method investment. This situation most likely could have been caused bya. An error in recording amortization of the excess of the investor’s cost over the investment’s underlying book value.b. The investee’s decision to reduce cash dividends declared per share of its common stock.c. An error in recording the unrealized gain from an increase in the fair value of available for sale securities in the income account for trading securities.d. A substantial fluctuation in the price of the investee’s common stock on a national stock exchange.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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An auditor’s analytical procedures indicate a lower than expected return on an equity method investment. This situation most likely could have been caused by
a. An error in recording amortization of the excess of the investor’s cost over the investment’s underlying book value.
b. The investee’s decision to reduce cash dividends declared per share of its common stock.
c. An error in recording the unrealized gain from an increase in the fair value of available for sale securities in the income account for trading securities.
d. A substantial fluctuation in the price of the investee’s common stock on a national stock exchange.
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