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how is materality calculated ?
how do you understand that what impacts whati need help for the 1st question of AAA
redback sportshow is all the materiality calculated ? specfically ROMM
All the amounts
link to the answer and question
https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/p7/exampapers/sgp/D18_AAASGP_A.pdf
https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/p7/exampapers/int/D18_AAAINT_QP.pdfPlease see my post here about calculating RELEVANT materiality https://opentuition.com/topic/march-june-2016-boston/
So if you have a misstatement of $1,234k you calculate that as a % of the RELEVANT parameter(s) and compare that with the “benchmarks”. So if it was $1,234k understatement of a liability that would be overstatement of PBT.
If > 10% PBT that’s definitely material
If < 5% it’s not material (but would go on a list of potential adjustement)
If between the two it’s a matter of judgement – the might also consider % of total current liabilities as well as total assets in making this judgement.
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