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Hi
I am doing this question (Sept/Dec 16 – Exam question 5. Crow Co Reporting) was comparing my answer to the solution.
However, I did not understand where the $46 million figure came from as there are no figures given to work out the materiality of the fire in the question except for the materiality thresholds.
The answer states:
Overall, the associated reduction in sales and the expenses relating to the repairs have contributed to a $46 million reduction in profits.Many Thanks for your help Rakhi.
This is from the stem of the question …
“The draft reported profit before tax and total assets for the year are £65 million (2015 – £111 million) and £650 million (2015 – £910 million) respectively.”
so profit before tax has fallen by $46 million when compared with last year
and the answer states that:
“Overall, the associated reduction in sales and the expenses relating to the repairs have contributed to a £46 million reduction in profits”
and the key words here are “… have contributed …”
So profits have moved from $111 million last year down to just $65 million this year and, according to my Citizen calculator, that’s a fall of $46 million
OK?
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