MATERIALITY DECISIONS AND PERFORMING ANALYTICAL PROCEDURES CHAPTER 8 PTER 8 Figu

Question

MATERIALITY DECISIONS AND PERFORMING ANALYTICAL PROCEDURES CHAPTER 8 PTER 8 Figure 8-12 Household, Inc. Summary Financial Statements ($ 000 Omitted) Income Statement 20x6 20x5 Sales Cost of sales Selling general and administrative expenses Other income and expense Income tax expense Gross proft Operating income Pretax income $ 3,513 $ 2,622 $ 891 $ 797 $ 3,413 $ 2,475 $ 938 $ 781 $ 157 (14) $ 81 $32 $ 49 $ 143 $ 55 Net income Balance Sheet Cash and cash equivalents Accounts receivable Inventories $ 208 $ 89 $ 1,183 $ 1,480 $190 $ 73 $ 1,179 $1,442 Current assets Property, plant and equipment Goodwill $ 649 $ 88 $2,179 $ 630 Total assets $ 2,206 Accounts payable Accrued expenses Taxes, including income taxes Total current liabilities Long-term debt $638 $ 376 $ 93 $ 565 $ 401 $ 121 $ 1,087 $150 $ 1,237 $ 1,107 $152 Total liabilities Common stock Retained earnings $ 1,259 $ 661 $259 $ 920 $ 2,179 $ 661 Total equity Total liabilities and equity $308 $969 $ 2,206 Summary Cash Flow Information Cash flow from operations Cash flow from investing activities Cash flow from financing activities $ 127 $ (107) $(2) S 18 $ 175 $ (90) $ 10 $ 95 Change in cash

Explanation / Answer

2006:

The value of materiality is arrived as below:

____

______

2005:

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a. Base Amount (larger of adjusted total support and revenue or adjusted total assets) Adjusted Total Support and Revenue (Annualize if Interim Amount is Used) $3,513,000 Adjusted Total Assets (if larger than Total Support and Revenue) 0

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