Items to be Answered: 61. In auditing the long-term investments account, an auditor is unable to obtain audited financial sLatements for an investee located in a foreign country. The auditor concludes that sufficient competent evilential matter regartding this investment cannot be oblained. 62. Due to recurring operating losses and working capital deficiencies, an auditor has substantial doubt about an cntity's aulity to continue as a going concern for a reasonable period of time. However, the financial statement disclnsures ncerning these matters are adequate. A principai auditor decides to take responsibility for the work of another CPA wh audited a wholly-owned subsidlaryof the entity and issued an unqualified opinion. The lotal assets and revenues he subsidiary represent 17% and 18%, respectively, of the total assets and revenues of the entity being audi-d. 64. An entity issues financial statements that present financial position and results of o ationt omils the related statement of cash flows. Management discloses in the notes to the financial statements thau i does not believe the state ment of cash nows to be a useful financial statement 66. Anentity changes its depreciation method for production equipment frum the straight-line to a units-of-production hod based on hours of utilzation. The audilor concurs with the change although it has a material effect on the parablity of the entity's financial statemenis 66. An entity is a defendant in a lawsuit alleging infringement of certain patent rights. lowever, the ullimate out- ome of the litigation cannot be reasonably estimated by management. The auditor believes there is a reasonable pe?sibility of a significantly material loss, but the lawsuit is adequately disclosed in the nntey uo the financial statements. 67. An entity discloses in the notes to the financial statements certain lease obligations. The auditor believes that the ailure to capitalize these leases is a departure from generally accepted accounting prineiples. List A List II Items to be Answered: 61. In auditing the long-term investments account, an auditor is unable to obtain audited financial sLatements for an investee located in a foreign country. The auditor concludes that sufficient competent evilential matter regartding this investment cannot be oblained. 62. Due to recurring operating losses and working capital deficiencies, an auditor has substantial doubt about an cntity's aulity to continue as a going concern for a reasonable period of time. However, the financial statement disclnsures ncerning these matters are adequate. A principai auditor decides to take responsibility for the work of another CPA wh audited a wholly-owned subsidlaryof the entity and issued an unqualified opinion. The lotal assets and revenues he subsidiary represent 17% and 18%, respectively, of the total assets and revenues of the entity being audi-d. 64. An entity issues financial statements that present financial position and results of o ationt omils the related statement of cash flows. Management discloses in the notes to the financial statements thau i does not believe the state ment of cash nows to be a useful financial statement 66. Anentity changes its depreciation method for production equipment frum the straight-line to a units-of-production hod based on hours of utilzation. The audilor concurs with the change although it has a material effect on the parablity of the entity's financial statemenis 66. An entity is a defendant in a lawsuit alleging infringement of certain patent rights. lowever, the ullimate out- ome of the litigation cannot be reasonably estimated by management. The auditor believes there is a reasonable pe?sibility of a significantly material loss, but the lawsuit is adequately disclosed in the nntey uo the financial statements. 67. An entity discloses in the notes to the financial statements certain lease obligations. The auditor believes that the ailure to capitalize these leases is a departure from generally accepted accounting prineiples. List A List
