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23 March, 10:05

Auditors found that the entity has not capitalized a material amount of leases in the financial statements. When considering the materiality of this departure from GAAP, the auditors would choose between which reporting options?

a. Unmodified opinion or disclaimer of opinion.

b. Unmodified opinion or qualified opinion.

c. Unmodified opinion with an emphasis-of-matter paragraph or an adverse opinion.

d. Qualified opinion or adverse opinion.

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  1. 23 March, 10:29
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    d. Qualified opinion or adverse opinion.

    Explanation:

    A qualified opinion is used in an auditor's report that accompanies this entity audited financial statements. It is an auditor's opinion that suggests this entity has not capitalized a material amount of leases in the financial statements and there is a materiality of departure from the generally accepted accounting principles (GAAP).

    The adverse opinion is when an entity needs to reiterate and complete another audit of its financial statements.
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