Playground Equipment Corporation has reported income from operations of $$5,000,000$ for the current year. During the year, the CEO settled

and paid a $$5,000,000$ class action lawsuit against the company resulting from damages incurred from the sale of defective products. The

settlement is reported as a miscellaneous expense with no footnotes provided. Which accounting assumptions and$/$or principles have been

violated?

a$.$ Revenue recognition, conservatism

b$.$ Historical cost, matching

c$.$ Materiality, disclosure

d$.$ Materiality, reporting entity