PLANNING MATERIALITY CALCULATION Only if the current year net income $($loss$)($or other measure$)$ is significantly different from the entitys historical results would $2-$year averaging to obtain normalized net income $($loss$)($or other measure$)$ be appropriate.PROFIT ORIENTED ENTITIESCurrent YearPrior YearNet income $($loss$)$Plus $($minus$)$ unusual, non$-$recurring revenues and expenses, and extraordinary items. $--$ ADJUSTED NET INCOME $($LOSS$)--$ Adjusted net income $($loss$)$ multiplied by:$5\%00$Current YearTOTAL ASSETS Total assets multiplied by:$1\%00$Current YearTOTAL REVENUES Plus $($minus$)$ unusual, non$-$recurring revenues $-$ ADJUSTED REVENUES $--$ Total adjusted revenues multiplied by:$1\%00$ JUSTIFICATION OF PLANNING MATERIALITY $1.$ Financial data source $($i$.$e$.$ actual, budget, projection$)$: Year end trial balance, actual data obtained from client. $2.$ Basis $($i$.$e$.$ normalized net income, revenue, total assets, other$)$:Adjusted net incomeJustification: USE THIS BOX TO DOCUMENT AND JUSTIFY WHICH BASIS YOU'VE SELECTED $3.$ Percentage of financial data source used:Standard $5\%$ used. $4.$ Amount selected $($planning materiality$)-5.$ Prior years final materiality $-$ Being that Apollo is a new client and we were not provided with materiality amounts from the predecessor auditor, we assume that planning materiality is $5\%$ of net income from $2019.6.$ Performance materiality$/$Tolerable misstatement $(75\%$ of planning materiality$)07.$ Listing scope $($amount threshold for suggested adjustments$)($using $5\%$ to $10\%$ of planning materiality based on expected level of adjustments is usually appropriate$)5\%0$ Engagement PartnerA. Anderson Engagement Quality Control ReviewerErnest Olds