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Oceanview Marine Company	5-2-a
Preliminary Materiality	2/22/2019
December 31, 2018

1. Planning data

	Current year (unaudited)	Prior year
Sales/revenue (net)	26,419,090	22,861,320
Expenses	6,316,336	5,669,023
Gross margin	7,285,791	6,331,206
Pre-tax income	969,455	662,183
Current assets	16,516,127	14,753,281
Current liabilities	7,149,557	5,921,882
Total assets	17,112,644	15,365,761
Materiality		50,000

2. Preliminary Judgment about Materiality

Measurement base (i.e., income, revenue, assets)	Percentage applied*	(rounded) Preliminary materiality
	%

* Materiality percentages: These materiality factors are provided as

Pre-tax income 3 10% guidelines only, and should be used only as

Assets 1% an aid in the development of your professional

Equity 5% judgment. The materiality level should represent

Revenue 1% the largest amount of a misstatement or group

Gross profit 5% of misstatements that would not, in your

judgment, influence or change a decision

based on the financial statements.

Oceanview Marine Company	5-2-b
Preliminary Materiality (continued)	CH 2/22/2019
December 31, 2018

3. Justify/Support your Preliminary Judgment about Materiality

State the factors you considered when you chose the base and the percentage for the preliminary judgment about materiality. Link the percentage you chose to the level of acceptable audit risk.

Base:

Percentage:

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