Sturdy Corporation owns and operates a large office building in a desirable section of New York City's financial district. For many years the management of Sturdy Corporation has:

(a) written up building accounts to appraisal values, and

(b) accounted for depreciation expense on the basis of appraised values. Wyley, the successor auditor, was engaged to audit Sturdy's financial statements for the year ended December 31, 1999. After completing the audit, Wyley concluded that, consistent with prior years, an adverse opinion would have to be issued because of the materiality of the apparent departure from historical cost.

Required:

1. Describe in detail what Wyley should include in an explanatory paragraph.

2. Draft the opinion paragraph.