Enter the total revenue or expenses (\$), the total assets (\$), and the net profit before tax (\$) into the Materiality Calculator. The calculator will evaluate the Materiality.

## Materiality Formula

The following formula is used to calculate the Materiality.

M = .0075 * R + .015 * A + .075 * P

Variables:

• M is the Materiality (\$)
• R is the total revenue or expenses (\$)
• A is the total assets (\$)
• P is the net profit before tax (\$)

## How to Calculate Materiality?

The following steps outline how to calculate the Materiality.

1. First, determine the total revenue or expenses (\$).
2. Next, determine the total assets (\$).
3. Next, determine the net profit before tax (\$).
4. Next, gather the formula from above =M = .0075 * R + .015 * A + .075 * P
5. Finally, calculate the Materiality.
6. After inserting the variables and calculating the result, check your answer with the calculator above.

Example Problem:

Use the following variables as an example problem to test your knowledge.

total revenue or expenses (\$) = 50000

total assets (\$) = 10000

net profit before tax (\$) = 30000

M = .0075 * R + .015 * A + .075 * P =  ?