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Materiality

So information is material if it is of real importance or having great consequences. Omitting material information or misstating material information in general purpose financial reports leads to a situation that primary users

Loosely based on Merriam-Webster, material is having real importance or great consequences and then materiality is the quality or state of being material.

So information is material if it is of real importance or having great consequences. Omitting material information or misstating material information in general purpose financial reports leads to a situation that primary users of general purpose financial reports potentially make different decisions as a result of the omission and/or misstatement.

Hence materiality is an entity-specific aspect, part of the relevance characteristic based on the nature and/or magnitude of the reporting item(s) to which the information relates in the context of the financial report of the relevant reporting entity.

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