For each of the situations below, identify the primary foundational principle that has been violated and explain why this is a violation. Identify only the primary violation. Do not give more than one principle for each situation. (2 marks each)

1. AB Corp. purchased manufacturing equipment for $300,000 and expenses it because they were having such a successful year.
2. BC Co. reported ending inventory of $2.5 million. They decided not to include a note on inventory in their financial statement.
3. CD Co. purchased equipment at auction and got a great deal because there were no other bidders. The CFO decided to record the purchase of equipment at fair market value and to record a gain of $40,000. Do not use the revenue recognition principle.
4. Legislation that will prohibit the import of all exotic pets is expected to pass in the House of Commons next year. DE Company's sole product is exotic pets, which they sell Canada-wide. President Holly Sandhead told the CFO that in terms of financial reporting, this doesn't change anything, and that it's "business as usual."
5. EF Co. has one shareholder who runs the business. He recently purchased a new computer for his personal use. He paid with his business bank account and debited office equipment.