L3 Notes_Part_6 - E. What basis would be more likely to be...

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Revenue as a Basis for Materiality
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Materiality A. Suppose the overstatement of revenues is material but it is counterbalanced with an equal overstatement of expenses. Do we care about this? B. Can immaterial items be ignored? C. Wholesaler’s A/P $30,000,000 10% misstated. Total Assets $400,000,000. Material? D. Would materiality as a percent of total assets increase, decrease, or stay the same as the size of the organization increases?
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Unformatted text preview: E. What basis would be more likely to be used for a growth company, NIBT or TA? Steps in Applying Materiality 1. Set Preliminary judgment about materiality 2. Allocate preliminary judgment about materiality segments 3. Estimate total misstatement in segment 5. Compare combined estimate with preliminary or revised judgment about materiality 4. Estimate the combined misstatement Arens, Elder Beasley text P L A N N I N G T E S T I N G...
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This note was uploaded on 10/05/2011 for the course ACG 5637 taught by Professor Monikacaushoulli during the Fall '08 term at University of Florida.

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L3 Notes_Part_6 - E. What basis would be more likely to be...

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