In which of the following situations has Hess Ltd$.$ violated the principle of conservatism?

A

Hess purchased inventory for $$18,500$ and recorded it for that amount. If Hess purchases $$30,000$ of inventory this month, it will receive a $2\%$ discount on all orders this month; however, Hess has no plans to do so$.$

B

Hess is being sued for $$400,000$ by a customer related to faulty product. Even though the case has yet to go to court, Hess has recorded a liability related to this lawsuit of $$400,000$ as legal counsel believes that it is likely that the customer has a strong case and damages could be at this amount.

C

One of Hess$$s customers declared bankruptcy. The customer$$s accounts receivable balance of $$7,000$ was written off.

D

Hess had a flood at its factory that damaged an expensive piece of equipment. The equipment continues to be amortized, although it is unlikely to be operational again.