Problem:
The directors of the company are undecided as to whether they should amend the financial statements to provide for additional doubtful debts of $150 000 as at 30 June 20X2. In accordance with the quantitative guidelines in AASB 1031 Materiality, the additional doubtful debts of $150 000 would be material as it represents:
Select one:
- 2.5% of total equity
- 20% of total receivables
- 4.6% of total current assets
- 60% of total cash
Note: Explain all steps comprehensively.