Accounting concepts

1. Read these two independent scenarios.

Scenario 1

Possum Products has changed the depreciation method it uses to account for depreciation on plant and equipment. The owners of the business feel that it is not necessary to disclose this information in its financial statements.

Scenario 2

Miki recorded inventory in his statement of financial position at $120,000. This is the value he thought he could sell the inventory for. The inventory cost $90,000.

Tasks

For each scenario:

1. State and explain the accounting concept that it relates to (Choose from Business entity concept, Money measurement concept, Going concern concept, Accounting period concept, Accounting cost concept, Duality aspect concept, Realisation concept, Accrual concept, Matching concept, Conservatism concept, Consistency concept, Economic entity concept, Materiality concept)
2. State whether or not the concept has been followed, giving a reason for your answer