Solution-Develop an estimate of the appropriate materiality

Develop an estimate of the appropriate materiality amount

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Reference no: EM133024955

Question - In planning every audit, the auditors are required to consider materiality for audit purposes. Described below are financial statement data from two separate companies:

	Franklin Co.	Tyler Co.
Total assets	$34,900,000	$2,700,000
Total revenue	29,600,000	4,500,000
Equity	13,800,000	1,000,000
Net income before taxes	1,600,000	90,000

Required -

a. Develop an estimate of the appropriate materiality amount for planning for Franklin Co., and describe how you arrived at the estimate.

b. Develop an estimate of the appropriate materiality amount of planning materiality for Tyler Co., and describe how you arrived at the estimate.

c. Describe five characteristics of a small misstatement that might render it qualitatively material.

Reference no: EM133024955

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Develop an estimate of the appropriate materiality amount

Reference no: EM133024955

Reference no: EM133024955

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