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Hi Mike,
Could you please reiterate the relevant materiality range (%) for Revenue, Total Assets, PBT, Net Assets and any other class relevant to exam scenario testing.
Thanks.
Tobii.
Generally the following are frequently 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.But circumstances may dictate higher or lower limits
Thanks Mike.
I would also like to clarify “Possible” and “Probable” thresholds in terms of going from “Contingent Liability” to making an actual “Provision”.
Cheers.
< or = to 50% … possible
> 50% … probable
50% is problematic … what happens when a lawyer says the your client’s chances of winning a case are 50/50?
That’s EXACTLY the legal opinion that you don’t want
But, if you go back to basics, the definition of ‘probable’ is that the chance of something happening is greater than the chance of it not happening
So ‘probable’ has to be >50%
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