(Change in Principle, Estimate) As a certified public accountant, you have been contacted by Ben Thinken, CEO of Sports-Pro Athletics, Inc., a manufacturer of a variety of athletic equipment. He has asked you how to account for the following changes.

1. Sports-Pro appropriately changed its depreciation method for its production machinery from the double-declining balance method to the production method effective January 1, 2007.

2. Effective January 1, 2007, Sports-Pro appropriately changed the salvage values used in computing depreciation for its office equipment.

3. On December 31, 2007, Sports-Pro appropriately changed the specific subsidiaries constituting the group of companies for which consolidated financial statements are presented.

Instructions Write a 1-1.5 page letter to Ben Thinken explaining how each of the above changes should be presented in the December 31, 2007, financial statements.