Aaron Rivers, CPA, is auditing the financial statements of Charger Company, a client for the past five years. During past audits of Charger, Rivers identified some immaterial misstatements (most of which relate to isolated matters and do not have common characteristics). A summary of these misstatements follows. (To illustrate, in 2015, the misstatements would have reduced net income by $13,200 if corrected:) Year 2015 2016 2017 2018 2019 Effect on Net Income $ (13,200) 5,000 (9,250) (2,000) 1,000 Effect on Assets $ (20,000) 12,000 (11,000 (5,500) 1,000 Effect on Liabilities $ (6,800) 7,000 (1,750) (3,500) 0 Effect on Equity $ (13,200) 5,000 (9,250) (2,000) 1,000 During the most recent audit, Rivers concluded that service revenue totaling $11,000 was recognized as of December 31, 2020 and it did not meet the criteria for recognition until 2021. When Rivers discussed this issue with Chris Turner, Charger Company's chief financial officer, Turner asked Rivers about the performance materiality level used in the audit, which was $25,000. Upon learning of this, Turner remarked, "Then there's no need to worry ... it's not a material amount. Why should we bother with this item?". Required: a. What is the dollar impact of the misstatement identified in 2020 on each of the following (assume a 21% tax rate for Charger)? Net income Assets Liabilities Equity b. Comment upon Turner's remark to Rivers. Is Turner's reasoning correct? c. Upon doing some research, Rivers learned of the rollover method and iron curtain method for evaluating the performance materiality of misstatements. Briefly define each of these methods. d. What is the total misstatement amount to consider when evaluating materiality under each of the following methods: Iron curtain method Rollover method e. Under each method, what is the minimum amount of adjustment Rivers would propose to Chargers Company's financial statements? Iron curtain method Rollover method