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Worked-example setupScope and assumptions
- The statement label USD thousands applies to the displayed line.
- The two adjustment amounts use whole US dollars and concern separate transactions.
- The stated rate is a comparison requested for this example, not a materiality rule.
- Period
- Northline draft annual statements
- Units
- Displayed USD thousands, whole USD, and decimal rate
- Rounding
- No rounding needed
Convert the displayed unit
Northline's draft balance sheet is labeled “USD thousands.” An asset line of 725 therefore represents $725,000:
725 × $1,000 = $725,000.
The conversion establishes the displayed amount. It does not identify the asset, its recovery period, or its measurement basis. Those facts need separate support.
Recompute the controller's comparison
A controller proposes a $91,000 credit and an $84,000 debit for two separate transactions. Their net effect is a $7,000 credit:
$91,000 - $84,000 = $7,000.
The controller also asks for 0.2 percent of $60,000,000 of total assets:
$60,000,000 × 0.002 = $120,000.
Both gross adjustments and the $7,000 net amount fall below that comparison amount. This arithmetic does not establish that the transactions are properly combined or immaterial.
Stop at the reporting decision
Identify what each transaction represents, apply the relevant accounting requirements, and consider the nature and context of any error. The scale conversion and percentage calculation are checked inputs to that analysis. They cannot decide recognition, measurement, classification, or materiality.
Verified calculation · reporting amount analysis
The curriculum loader recomputed this example before it entered the site build. Expand any structured input to inspect the stated facts.
- amounts
- 4 fields
Inspect data
{
"displayed_asset_line": 725,
"proposed_credit": 91000,
"proposed_debit": 84000,
"total_assets": 60000000
}- differences
- 1 field
Inspect data
{
"net_credit": {
"minuend": "proposed_credit",
"subtrahend": "proposed_debit"
}
}- percentage amounts
- 1 field
Inspect data
{
"stated_comparison_amount": {
"amount": "total_assets",
"rate": 0.002
}
}- scaled amounts
- 1 field
Inspect data
{
"asset_amount_dollars": {
"amount": "displayed_asset_line",
"scale": 1000
}
}Recomputed result
| Measure | Value |
|---|---|
| asset amount dollars | 725,000 |
| net credit | 7,000 |
| stated comparison amount | 120,000 |