The following situations involve the application of accounting concepts or principles. In some cases, more than one concept or principle may be involved.
•White Enterprises recently changed its method of computing depreciation for the third time in three years.
•Hethcox Distributors sold two of its five divisions immediately after the close of its most recent fiscal year. Company executives included information regarding the sale of these two divisions in the footnotes to the company’s financial statements.
•Inventory is the largest asset of Still Gardening Company. Last year, Still’s inventory was reported at its historical cost in the company’s balance sheet. This year, the company intends to report its inventory at market value because the inventory’s market value is significantly below its historical cost.
•A footnote to the recent financial statements issued by Mason, Inc. lists the cash payments that the company is required to make over the next several years under its long-term lease agreements.
Required:
(a) Identify the accounting concepts or principles involved in each of these situations.
(b) Indicate whether the given accounting concept or principle has been properly applied in each case. Explain your reasoning.