The amount of a transaction may be immaterial by company standards but still be considered significant by financial statement users.

Question

Quizplus · Accepted Answer

Materiality is a subjective concept that depends on various factors, including the size and nature of the transaction, the financial position of the company, and the expectations of financial statement users. Therefore, a transaction may not be material to the company but still be considered significant by financial statement users, depending on their information needs or decision-making processes. As a result, companies are required to disclose all significant transactions or events, whether or not they meet the materiality threshold, to provide users with relevant and reliable information for making informed decisions.

The Amount of a Transaction May Be Immaterial by Company