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2 ) Materiality: ABC provides financial statements to: Preferred shareholders - there are 2 preferred shareholders who receive annual dividend payments. Dividends are only paid
Materiality:
ABC provides financial statements to:
Preferred shareholders there are preferred shareholders who receive annual dividend payments. Dividends are only paid when net income is greater than $ The dividend is calculated as a of net income $ As part of the dividend payment calculation, the maximum salary for the key management members which can be expensed in the calculation of net income above is $
The bank ABC has an operating line of credit with a local bank. To date they have never drawn down the maximum on the line of credit. ABC also has a strong credit history with the bank.
ABC's draft financial statements showed the following balances:
Total customer revenues $
Government grant revenue $note
Payment of environmental penalty $note
Salary of the key management members $note
Net income before tax $
Total assets $
Note : this was a onetime grant to subsidize the hiring of some parttime students.
Note : this was a payment for disposal of waste which was found to have environmental toxins. Although the company takes multiple steps to meet all regulations, sometimes unexpected penalties occur.
Note : the amount is made up of salary of $ plus discretionary bonus of $
Required: Discuss the key users and their objectives. Use that to determine the materiality both overallplanning and performance materiality You will need to show all of your calculations.
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