Delta Investments provides a group of mutual funds for investors. The components

Question

Delta Investments provides a group of mutual funds for investors. The components of its financial statements are (1) net income before taxes = $40 million, (2) total assets = $4.3 billion, and (3) total revenues = $900 million. Murphy & Johnson uses maximum percentage applicable on total assets for determining planning materiality.

Determine planning materiality, and tolerable misstatement. Justify your decisions. (Enter your answers in millions, not thousands, of dollars. Round your answers to 2 decimal places. Omit the "$" sign in your response.)

Planning Materiality:

Tolerable mistatement

Determine planning materiality, and tolerable misstatement. Justify your decisions. (Enter your answers in millions, not thousands, of dollars. Round your answers to 2 decimal places. Omit the "$" sign in your response.)

Planning Materiality:

Tolerable mistatement

Explanation / Answer

Planning Materiality = 4.3 billion * .5% = 21.5 million

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Tolerable Misstatement = 21.5 million *.50 =10.75 million

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