1. Planning data Current year Prior year (unaudited) 26,419,090 6,316,336 7,285,791 Sales/revenue (net) Expenses Gross margin Pre-tax income 22,861,320 5,669,023 969,455 Current assets 16,516,127 6,331,206 662,183 14,753,281 5,921,882 15,365,761 50,000 Current liabilities 7,149,557 17,112,644 Total assets Materiality 2. Preliminary Judgment about Materiality Measurement base (i.e., income, revenue, assets) Percentage applied* (rounded) Preliminary materiality % Materiality percentages: Pre-tax income Assets Equity Revenue Gross profit 3- 10% - 1% 2-5% - 1% - 5% These materiality factors are provided as guidelines only, and should be used only as an aid in the development of your professional judgment. The materiality level should represent the largest amount of a misstatement or group of misstatements that would not in your judgment, influence or change a decision based on the financial statements Oceanview Marine Company Preliminary Materiality (continued) December 31, 2018 3. Justify/Support your Preliminary Judgment about Materiality State the factors you considered when you chose the base and the percentage for the preliminary judgm about materiality. Link the percentage you chose to the level of acceptable audit risk. Base: I Percentage