Response to the following questions:
1. Maxwell Company owns an equipped plant that has a book value of $150 million. Due to a permanent decline in consumer demand for the products produced by this plant, the market value of the plant and equipment is appraised at $20 million. Describe the accounting treatment for this impairment.
2. If significant changes are made in the accounting principles applied from one period to the next, why should the effect of these changes be disclosed in the financial statements?