1. Business
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  3. your audit client is in the construction industry as such...

Question: your audit client is in the construction industry as such...

Question details

Your audit client is in the construction industry. As such, the company has numerous fixed asset additions during the year, as well as a material expense for equipment rental. In your planning phase of the audit, you discover from conversations with the audit client's accounting personnel that there appears to be a lack of understanding on the correct accounting treatment for capital leases versus operating leases for equipment. Based upon this information, what relevant assertion(s) for fixed assets should you as the auditor be concerned about? Explain.

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