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Bright beverages Ltd. Is 100 percent owned by Dark Bottling. While the company has in the past been profitable, it incurred a loss for the year then ended December 31, 2022. The parent company, Dark Bottling, has indicated that if Bright incurs another loss, it will put the subsidiary up for sale. In response, Bright is looking to expand its market share and therefore its profitability by performing private labelling for a nationwide supermarket chain, ValueFoods Inc. Private labelling involves producing and packaging pop and other non-alcoholic beverages under the Valuefoods label. However, in order to proceed with this endeavor, Bright needs a packaging facility dedicated exclusively to copackaging. To finance this expansion, the company has applied to the Better Business Bank for financing. The bank has indicated that before it will approve the loan application it would like to see audited financial statements for 2022 . It also wants to ensure the entity has a current ratio of 2:1. Bright Beverages has provided you, their new auditor, with the draft (unaudited) financial statements below. Required: (a) Identify the users of the financial statements and their needs. (b) Given the users' needs, what is the most appropriate base for materiality? (c) Calculate the three levels of materiality and conclude on each. (d) What impact does audit risk have on the materiality calculation(s)? Balance Sheet as at December 31, 2022 Assets Current Assets Cash Accounts receivable, net Prepaid expenses Inventory Total current assets Capital Assets Office furniture and equipment, net Building, net Land Total Capital Assets Total Assets Current Liabilities Accounts Payable Other accrued expenses Warranty provision Current Portion of long-term debt Total Current Liabilities Long term Liabilities Bank Loans Total Long term Liabilities 85,106964,2242,004,9333,054,263$4,808,980 Equity Common Shares Retained Earnings Total Equity Total Liabilities and Equity 248,0001,482,3941,730,394$4,808,980

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