Presented below are three different transactions related to materiality. Do you classify these transactions as material? (a) Blair Co. has reported a positive trend in earnings over the last 3 years. In the current year, it reduces its bad debt allowance to ensure another positive earnings 1year. The impact of this adjustme nt is equal to 3% of net income. (bi Hindi Co. has an unusual gain of $3.1 million on the sale of plant assets and a $3.3 million loss on the sale of investments. It decides to net the gain and loss because the net effect is considered immaterial. Hindi Cos income for the Current year was $10 million. Damon Co. expenses all capital equipment under $2,500 on the basis that it is immaterial. The company has followed this practice for a number of years. 1b 1% x Identify whether the following expenditures is recorded as an asset or an expense. Assume all items are material. [a] Legal fees paid in connection with the purchase of land are $1,500. J Asset (b1 Eduardo, Inc. paves the driveway leading to the ofce building at a cost of $2 1.000. EXPENSE May be either (cl A meat market purchases a meat-grinding machine at a cost of $3,500. (d) On June 30. Monroe and Menu. medical doctors. pay 6 months' ofce rent to cover the month of [ :1 July and the next 5 months. [e1 Smith's Hardware Company pays $9,000 in wages to laborers for construction on a building to be [ :1 used In the busmess. if} Alvarez's Florists pays wages of $2,100 for the month to an employee who serves as driver of their I =1 delivery truck