What is the planning materiality for:

• Intangibles, net
• Common stock, 26,121 shares issued
• Deferred compensation
• Accumulated other comprehensive income

EARTHWEAR CLOTHIERS
Allocation of Materiality: Tolerable Misstatements
December 31, 2016
(In thousands)
							Tolerable Misstatement as % of
Account Name	2015		2016 Unaudited Trial Balance		Tolerable Misstatement		Planning Materiality *		Account Balance **		Explanation
Cash and cash equivalents	$	48,978	$	79,359	$	1,587	50	%	2	%	Simple to verify
Receivables, net	$	12,875	$	8,643	$	1,577	50	%	18	%	Large account with misstatements expected, costly to audit
Inventory	$	1,22,337	$	1,47,693	$	2,368	75	%	2	%	Large and complex account with misstatements expected, costly to audit
Prepaid expenses	$	17,772	$	15,647	$	1,565	50	%	10	%	Routine accounting expected with the use of analytical procedures for reasonableness
Deferred income tax benefits	$	7,132	$	10,338	$	2,368	75	%	23	%	Relatively complex, estimation involved, related to Deferred Income Taxes
Property, Plant, & Equipment	$	2,06,426	$	2,23,736	$	1,578	50	%	1	%	Relatively little change from prior year, not difficult to audit
Accumulated depreciation and amortization	$	85,986	$	97,722	$	2,368	75	%	2	%	Accounting estimate tested with the use of substantive analytical procedures
Intangibles, net	$	423	$	1,734	$	173		%	10	%	The amount will be impaired which is not difficult to audit
Lines of credit	$	11,011	$	10,510	$	1,578	50	%	15	%	Relatively little volume, not difficult to audit via 3rd party info
Accounts payable & Reserve for returns	$	68,399	$	60,286	$	2,368	75	%	4	%	Relatively difficult to audit with some differences expected
Accrued liabilities & Accrued profit sharing	$	28,270	$	33,600	$	2,368	75	%	7	%	Relatively costly to audit with some differences expected
Income taxes payable & Deferred income taxes	$	18,057	$	24,567	$	2,368	75	%	10	%	Simple to verify but involves complex calculations
Common stock, 26,121 shares issued	$	261	$	261	$	65		%	25	%	No change from prior year, easily verified
Donated capital	$	5,460	$	5,460	$	1,365	43	%	25	%	No change from prior year, easily verified
Additional paid-in capital	$	20,740	$	25,719	$	1,578	50	%	6	%	Little change from prior year, not difficult to audit
Deferred compensation	($	79)	($	36)	$	0		%	0	%	Not difficult to audit, examine current year vesting activity
Accumulated other comprehensive income	$	3,883	$	2,173	$	543		%	25	%	Involves some complex applications of GAAP
Retained earnings	$	3,17,907	$	3,61,402	Not Applicable		Not Applicable		Not Applicable		Not Applicable
Treasury stock, 6,546 and 6,706 shares at cost, respectively	($	1,43,950)	($	1,34,512)	$	1,578	50%		1	%	Little change from prior year, not difficult to audit
Total Amount of Tolerable Misstatement Allocated To Balance Sheet Accounts					$	25,825
Planning Materiality (from work paper 3-7)					$	3,157
Ratio of Total Tolerable Misstatement to Planning Materiality ***						8.2