During the audit of the following companies` financial statements for the year ended 31 December 2020 several matters have been noted as shown below.

Clarinet Cos Profit before tax was Rs7 million and a statement of financial position total of Rs23 million. Clarinet owns a number of its retail premises, which it revalues annually. This year several of its shops rose sharply in value due to inflated property prices in their locality.

Clarinet does not revalue its factory premises, which are held in the statement of financial position at Rs 2.7 million.

Required:

Briefly give your views on the above situations taking into consideration IAS 16 and IAS 40

state what type of auditors report (MODIFIED OR UNMODIFIED) should be issued and explain your choice.

You should not reproduce the entire audit report. Only mention appropriate extracts which are relevant.

ps: elaborate clearly taking into account IAS 16 AND IAS 40