Your firm, Auditors R Us LLC, has been auditing the financial statements of the public company Essential Trading Inc. for the year ended December 31, 2019. During fieldwork your team discovered the following:

1. Depreciation expense of $300,000 was not recorded by Management. Your teams Proposed Adjusting Journal Entry was accepted and recorded by Management.

2. Management capitalized non-software Research and Development costs of $1,000,000 on January 1, 2019. They arbitrarily chose to amortize it over 10 years. Your team made a Proposed Adjusting Journal Entry to expense it citing ASC 730 as the relevant US GAAP. However, Management rejected it. Both parties agreed to disagree.

3. On February 15, 2020 you learnt that the Essential Trading lost a client who had accounted for 30% of its 2019 revenues. Your firm also performed an audit of Essential Trading Inc.s internal control and issued an unqualified report. Financial Data for Essential Trading Inc. for the year 2019: Net Income $5,000,000 Basic EPS $10.00 Diluted EPS $6.67 Weighted Number of Shares Outstanding: 500,000 Dilutive Securities at 12-31-2019: 250,000

Requirement: Prepare in good form your firm Auditors Report to be issued on May 17, 2020.