For each of the following, determine an appropriate preliminary materiality estimate.

Scenario 1: You are planning the audit of ABC Company. Income before taxes was $5 million in the prior year, $4,900,000 two years ago, and $4,300,000 three years ago. The current year income before taxes for nine months is $5,800,000. The Company is a publically-held diversified manufacturing firm in an expanding industry with sales increasing 15% annually (other expenses have increased at other rates).

Scenario 2: Using the facts from scenario 1, except the company is closely held and creditors are primary financial statement users, how might the answer change?