Fabio recently sold his restaurant for $650 000, the value of the net assets as reported on the balance sheet. After the sale, Fabio realized that he could've sold the restaurant for as much as $950 000 as the fair value of the assets was $300 000 higher than what was reported on the balance sheet. Fabio is suing the auditors for his loss. The auditor's best defence is

Question

Quizplus · Accepted Answer

The auditor's best defense is the absence of a misstatement because the assets were reported at their net book value, which is in accordance with accounting standards. The fair value was not required to be reported unless there was an impairment or revaluation policy in place.

Fabio Recently Sold His Restaurant for $650 000, the Value