Swell Computers manufactures desktop and laptop computers. The components of the

Question

Swell Computers manufactures desktop and laptop computers. The components of the financial statements are: (1) net income before taxes $500,000, (2) total assets = $2.2 billion, and (3) total revenues = $7 billion. Swell Computers uses 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 1 decimal place. 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 1 decimal place. Omit the "$" sign in your response.)

Explanation / Answer

Planning Materiality = 2.2 billion * .5% = 11 million

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Tolerable Misstatement = 11 million *.50 = 5.5 million

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