The materiality for Holloy Company is $75 000. There are carryforward misstatements of $25 000 from the previous year. Current year anticipated misstatements are $15 000, with anticipated corrections of $10 000. What is the performance materiality?
A) $45 000
B) $50 000
C) $55 000
D) $90 000

Question

Quizplus · Accepted Answer

Performance materiality is calculated as the greater of materiality or the sum of carryforward misstatements and anticipated misstatements net of anticipated corrections. In this case, performance materiality is $75,000 (materiality) or $25,000 (carryforward misstatements) + $15,000 (anticipated misstatements) - $10,000 (anticipated corrections) = $30,000, whichever is greater. Therefore, performance materiality is $75,000.

The Materiality for Holloy Company Is $75 000