In planning every audit, the auditors are required to consider materiality for audit purposes. Described below are financial statement data from two separate companies:

a. Develop an estimate of the appropriate amount of planning materiality for Franklin Co., and describe how you arrived at the estimate.
b. Develop an estimate of the appropriate amount of planning materiality for Tyler Co., and describe how you arrived at the estimate.
c. Describe five characteristics of a small misstatement that might render it qualitativelymaterial.

Franklin Co. Tyler Co. Total assets Total revenue $34,900,000 29,600,000 13,800,000 1,600,000 $2,700,000 4,500,000 1,000,000 90,000 Equity Net income before taxes