The statement about inherent risk assessments for property, plant, and equipment that is inaccurate is
A) inherent risk is normally low for the classification and presentation assertions for PPE assets acquired under finance leases.
B) inherent risk is normally low for the existence assertion in a merchandising entity because PPE assets are not generally vulnerable to theft.
C) inherent risk is normally moderate to high for the existence assertion in a manufacturing entity because scrapped or retired PPE assets may not be written off the books.
D) inherent risk is normally low for the accuracy, valuation and allocation assertion when PPE assets are purchased for cash.

Question

Quizplus · Accepted Answer

Inherent risk for the classification and presentation assertions for PPE assets acquired under finance leases can be higher due to the complexity of accounting standards and the judgments involved in determining whether an arrangement constitutes a lease and how it should be classified and presented.

The Statement About Inherent Risk Assessments for Property, Plant, and Equipment