Polaroid Corporation, a manufacturer of instant cameras and film, changed from an accelerated depreciation method for financial reporting purposes to the straight-line method for assets acquired after January 1, 1997. As noted in Polaroid’s 1997 annual report:

The company changed its method of depreciation for financial reporting for the cost of buildings, machinery, and equipment acquired on or after January 1, 1997, from a primarily accelerated method to the straight-line method.

Polaroid’s deteriorating financial position led it to declare bankruptcy in 2001. Write a one-page memorandum that argues that the change in accounting method may have been a signal that the company was in financial trouble. In your memorandum, discuss the effects of the change on future earnings and cash flows. In addition, discuss which of the two depreciation methods is more conservative.