Yates Manufacturing Ltd. is preparing its year-end financial statements. Yates is a private enterprise. The controller, Theo Kimbria, is confronted with several decisions about statement presentation for the following items. 

1. The company has decided to change its depreciation method for machinery to units of production rather than straight-line. This is due to the way in which the machinery is now being used. 

2. Trying to meet the criteria for capitalization of development costs has become very difficult because of highly competitive market conditions. Therefore, the practice of deferring and amortizing development costs has been abandoned in favour of expensing development costs as they are incurred. 

3. When the year-end physical inventory adjustment was made for the current year, the controller discovered that the prior year's physical inventory sheets for an entire section of the warehouse had been mislaid and left out of last year's count. 

4. The method of accounting that is used for financial reporting purposes for certain receivables has been approved for tax purposes during the current tax year by the Canada Revenue Agency. This change for tax purposes will cause both current taxes payable and future tax liabilities to change substantially. 

5. Management has decided to switch from the FIFO inventory cost formula to the average cost inventory cost formula for all inventories. 

Instructions 

For each of the five changes that Yates Manufacturing Ltd. made in the current year, advise Theo on whether the change is a change in accounting policy, a change in estimate, a correction of an error, or none of these. Explain if the accounting treatment would be different under ASPE or IFRS. Provide a short explanation for your choice. Determine if retrospective or prospective application would be required in each case and what information would be required in any note disclosure. If the information that is provided is insufficient for you to determine the nature of the change, identify what additional information you would need and how this might affect your response.