Mcq

Paddington’s PBT is $29m. During the audit following issues have been identified:
1)Paddington’s main competitor filed lawsuit for $3m alleging breach of copyright. This case is on going and will not be resolved prior to auditors report being signed. Paddington’s lawyers belief the claim is only possible to succeed. Paddington’s has sufficient cash to make settlement if they lose the case
2)A warranty provision of $25m has not been recognized
3)Depreciation of $1m has not been recorded in financial statement
4)Intangible assets have been overstated in financial statement by $12m

Which of the following issues identified during audit is likely to lead an adverse opinion on Paddington’s financial statement

a)Lawsuit
b)warranty provision
c)Depreciation
d)Intangible assets

Sir correct ans is B

My question:

Sir I just want to ask , even option D should also have been correct in my opinion. If we calculate materiality of all above 4 options it will be as follows

Lawsuit —–10.3%—— material but not pervasive as below 20%
warranty provision—-86%—— material and pervasive as above 20%
Depreciation——3.4%———immaterial as below 5%
Intangible assets——41%———material and pervasive as above 20%

As both warranty provision and intangible assets are material and pervasive hence adverse opinion must be issued for both of these issues.

But correct ans given in kit is just warranty provision. Can you please explain why intangible assets cannot be the correct answer