For each of the following independent situations, assume that any amounts would be material.

(I) Indicate the TYPE of appropriate audit report; A. unqualified, B. qualified or adverse, C. qualified

or disclaimer, D. Disclaimer, E. Qualified only, or F. Other. INDICATE the situation involved, i.e.

Accounting situation, and DISCUSS the situation.

(II) State whether an explanatory paragraph would be included, and if so, what would be included in

the explanatory paragraph.

(III) For an UNQUALIFIED auditors report, if the wording would be changed, indicate how it would be

Changed.

A- The company uses Lower of Cost or Market, rather than Replacement Cost, to value inventory. B- The company uses an appraisers estimate of current Replacement Cost to report the value of previously acquired land owned by the company.