In the first quarter of 1994, AT&T, the giant telecommunications company, reported a net loss because it reduced its income by $1 .3 billion, or $.96 per share, as a result of changing its method of accounting for disability and severance payments.

Without this charge, the company would have earned $1.15 billion, or $.85 per share. Where on the corporate income statement do you find the effects of changes in accounting principles? As an analyst, how would you treat this accounting change?Lo1