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Pat Colt Is auditing the financlal statements of Manning Company. The following is a summary of the uncorrected misstatements that Colt has identified during the
Pat Colt Is auditing the financlal statements of Manning Company. The following is a summary of the uncorrected misstatements that
Colt has identified during the past three years. These misstatements are Immaterlal and have related to Isolated matters. In this
summary, parentheses imply that the misstatements would have reduced balances If they had been corrected eg in the
misstatements would have reduced net Income by $ assets by $ Ilabilitles by $ and equity by $ if
corrected
During the most recent audit, Colt concluded that expenses totaling $ were recognized In January when MannIng pald
them but should have been recognized in
Requlred:
a What is the dollar Impact of the misstatement Identlfied In on each of the following assume a tax rate for Manning
Note: Enter amounts to be deducted with a minus sign.
b Assume that performance materlality was set at $ Would the misstatement be materlal if using the rollover method?
c Assume that performance materlality was set at $ Using the Iron Curtaln method, would the $ misstatement in
result In the need for an adjusting adjustment to the financlal statements?
d If performance materlality were established at $ for Manning, what is the total misstatement amount to consider when
evaluating materlality under each of the following methods:
e If performance materlality were established at $ for Manning, under each method, what is the minimum amount of
adjustment Colt would propose to MannIng's Company's financlal statements?
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