Reference no: EM132756887

Problem 1: On January 2, 2021, IC Company received a notice from its primary suppliers that effective immediately, all wholesale prices would be increased by 10%. On the basis of the notice, IC revalued its December 31, 2020 inventory to reflect the higher costs. As a result, the Statement of Financial Position reflects inventory stated at an amount higher than its net realizable value. The inventory constituted a material proportion of total assets; however, the effect of the revaluation was material to current assets but not to total assets or net income. In reporting on the company's financial statements for the year ended December 31, 2020, in which inventory is valued at the adjusted amount, the auditor would most likely

a. Express an unmodified opinion provided the nature of the adjustment and the amounts involved are disclosed in notes to the financial statements.

b. Express a qualified opinion.

c. Disclaim an opinion.

d. Express an adverse opinion.