Answer:
Two examples of materiality are:
1.Separate disclosure of balance sheet items - If 10% or more of their immediate category or more than 5% of total assets.
2.Receivables from officers and stockholders - Disclose details of receivables from any officer or principal stockholder if it equals or exceeds $20,000 or 1% of total assets.
Explanation:
Material guidelines indicate the relevance of a specific financial information by creating a set of quantitative materiality guides or criteria that addresses a variety of financial situations and is used as an authoritative support.
The predominant view among FASB is that materiality judgments can properly be made only by those who have all the facts and not relying on a formulated numerical guides.
However, I personally feel that the materiality guidelines should be quantified. Having a formulated set of standards would make it easier for decision makers to analyze the impacts that any material transaction could have on financial statements and the ongoing concerns of the organization. By having such guidelines, the relevance of certain situations would be universally understood with a unified approach.
