Each of the statements below violates a convention in accounting. State which of the following accounting conventions is violated: consistency, materiality, conservatism, full disclosure, or cost-benefit.
1. A series of reports that are time-consuming and expensive to prepare are presented to the owner each month, even though they are never used.
2. A company changes its method of accounting for depreciation.
3. The company in 2 does not indicate in the financial statements that the method of depreciation was changed; nor does it specify the effect of the change on net income.
4. A company’s new office building, which is built next to the company’s existing factory, is debited to the factory account because it represents a fairly small dollar amount in relation to the factory.
5. The asset account for a pickup truck still used in the business is written down to what the truck could be sold for, even though the carrying value under conventional depreciation methods is higher.