L2 Notes_Part_10 - depreciation, leaving the restaurant a...

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Going Concern? In the last 3 months of the current year, Oil Refining Company decided to change direction and go significantly into the oil drilling business. Management recognizes that this business is exceptionally risky and could jeopardize the success of its existing refining business, but there are significant potential rewards. During the short period of operation in drilling, the company has had three dry wells and no successes. The facts are adequately disclosed in footnotes.
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Going Concern? For the year under audit, Maui Maui Inc. had average revenues of $10,000 and expenses of $20,000 per month of which $3,000 was
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Unformatted text preview: depreciation, leaving the restaurant a net worth calculated at Net Realizable Value of $100,000 at year end. The owners are committed to the business but the negative cash flow is troubling. Emphasis of a Matter Under certain circumstances an auditor may want to emphasize a specific matter regarding the financial statements even though he or she intends to express an unqualified opinion. Examples Related Party Transactions Subsequent events Prior years F/Ss audited by another firm Contingent liability This information should be presented in an explanatory paragraph....
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L2 Notes_Part_10 - depreciation, leaving the restaurant a...

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