Favviume
Aug 16, 2007, 02:29 PM
My question is
Presented below as three different transactions related to materiality. Explain whether you would classify these transactions as material.
1) marcus Co. has reported a positive trend earnings over the last 3 years. In the current year, it reduces its bad dedt allowance to ensure another positive earnings year. The impact of this adjustment is equal to 3% of net income.
2) sosa co. has an extraordinary gain of 3.1 million on the sale of plant assent and a 3.3 million loss on the sale of investment. It decides to net the gain and loss because the net effect is considered immaterial. Sosa Co. income for the current was 10 million.
3) seliz co. expenses all capital equipment under 25,000 on the basis that it is immaterial.
The company has followed this practice for a number of year.
:confused: :confused: :confused: :confused:
Presented below as three different transactions related to materiality. Explain whether you would classify these transactions as material.
1) marcus Co. has reported a positive trend earnings over the last 3 years. In the current year, it reduces its bad dedt allowance to ensure another positive earnings year. The impact of this adjustment is equal to 3% of net income.
2) sosa co. has an extraordinary gain of 3.1 million on the sale of plant assent and a 3.3 million loss on the sale of investment. It decides to net the gain and loss because the net effect is considered immaterial. Sosa Co. income for the current was 10 million.
3) seliz co. expenses all capital equipment under 25,000 on the basis that it is immaterial.
The company has followed this practice for a number of year.
:confused: :confused: :confused: :confused: