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Dear Mike,
How is threshold for materiality to conclude in the exam that an FS item is material?
As what I saw in some answer model:
– For assets/liabilities items: >= 3% of total assets
– For revenue/exp items: >=3%
– Profit: >=5%
However, they are inconsistent in some answer model and they make me quite confused.Of course, in my situation, pls ignore qualitative factors.
Please advise for the threshold.
Thanks a lot.
The examiner will normally make it rather more obvious than a marginal decision!
The following are commonly used:
0.5% to 1% of gross revenue;
1% to 2% of total assets;
1% to 2% of gross profit;
2% to 5% of shareholders’ equity;
5% to 10% of net profit.OK?
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