The following three different transactions relate to materiality. Explain whether you would 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 expense to ensure another positive earnings year. The impact of this adjustment is equal to 3% of net income.
b. Hindi SE has a 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 SE's income for the current year was €10 million.
c. Damon SpA 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.