MNE and Associates is auditing Blanchard Company.MNE has decided to use 5% of income (earnings) before income tax as a benchmark.If income (earnings) before income tax was $33 million, what would be the amount of planning materiality?
A)$1.65 million
B)$31.43 million
C)$660,000
D)$34.65 million

Question

Quizplus · Accepted Answer

Planning materiality is calculated as a percentage of a chosen benchmark, in this case, 5% of income before income tax. Therefore, 5% of $33 million equals $1.65 million.

MNE and Associates Is Auditing Blanchard Company