8. [Change in depreciation method, effect and motivation] Pope and Talbot [POP] changed the method of depreciation for its US. pulp production assets from straight-line to units-of-pro- duction in 1998 in order to bring the accounting methods of the Company's pulp mills into conformity with its Canadian opera- tions. The company stated: The Company believes this method, common within the industry, more appropriately matches production costs with pulp sales revenues The impact to the 1998 loss from continuing operations was a reduction of de- preciation expense before tax of $.8 million. The cumu- lative effect of this accounting change on years prior to 1998 was income of $.7 million, net of tax. or S 06 per share. The company's 1998 net income was $342,000.

a. Compute POP's net income before the cumulative effect of the accounting change.

b. Compute POP's net income before the change in depreciation method. (Assume a 35% tax rate.)

c. Present another reason, other than conformity, that might ex- plain why the firm made the accounting change in 1998.