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To satisfy the valuation assertion when auditing an investment accounted for by the equity method, an auditor most likely would

A. Inspect the stock certificates evidencing the investment
B. Examine the audited financial statements of the investee company
C. Review the broker's advice or canceled check for the investment's acquisition
D. Obtain market quotations from financial newspapers or periodicals

User UtLox
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Final answer:

To verify the valuation of an equity-method investment, an auditor would most likely examine the audited financial statements of the investee company, as this gives insight into the investee's financial health.

Step-by-step explanation:

The question relates to the procedures an auditor would use to verify the valuation of an investment accounted for by the equity method. When auditing such an investment, the auditor is tasked with confirming that the value recorded for the investment is accurate and reasonable. This process often requires the auditor to examine more than just the physical evidence or market value; they need to assess the financial viability and performance of the entity in which the investment has been made.

Therefore, the most likely approach for an auditor to satisfy the valuation assertion would be to examine the audited financial statements of the investee company. This enables the auditor to evaluate the investee's profitability and financial health, which will influence the value of the investment. Inspecting stock certificates, reviewing purchase documents, or obtaining market quotations would not provide the same level of insight into the ongoing value of an equity-method investment.

User SmokeyShakers
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