Question

During the year, your client changed from the straight-line to an accelerated method of depreciation. This change has no material effect on the current year's financial statements, but will have a substantial effect in later years. You agree with the change, which is adequately disclosed. The auditor will most likely issue a(an):

-Standard unmodified opinion

-Unmodified opinion with explanatory paragraph

-Unmodified opinion with changes to standard report wording

-Qualified opinion

-Disclaimer of opinion

-Adverse opinion

Answer 1

The auditor will most likely issue an Unmodified opinion with explanatory paragraph.

Step-by-step explanation:

The auditor will most likely issue an Unmodified opinion with explanatory paragraph in this case. When a change in accounting policy has no material effect on the current year's financial statements, but will have a substantial effect in later years and is adequately disclosed, the auditor will give an unmodified opinion with an explanatory paragraph to highlight the change and its potential future impact.

In this situation, the change from straight-line to an accelerated method of depreciation has no immediate impact on the current year's financial statements, but it is important for users of the financial statements to be aware of the change and its potential implications in the future. Therefore, the auditor will provide an unmodified opinion with an explanatory paragraph to address this matter.