Scenario 1: Murphy & Johnson is a privately owned manufacturer of small motors for lawnmowers,...
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Accounting
Scenario 1: Murphy & Johnson is a privately owned manufacturer of small motors for lawnmowers, tractors, and snowmobiles. The components of its financial statements are (1) income before taxes $21 million, (2) total assets - $550 million, and (3) total revenues $775 million Murphy & Johnson's CPA firm uses the normal percentage for income before taxes for a public company for determining overall materiality a. Determine overall materiality and determine tolerable misstatement. Justify your decisions b. During the course of the audit, Murphy & Johnson's CPA fim detected two misstatements that aggregated to an overstatement of Income of $125 million Evaluate the audit findings Justify your decisions Catan
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