1) In the accounting industry, there are many changes that occur within financial reporting including changes in Accounting principals and estimates. A change in accounting principle is defined as: A change from one generally accepted accounting principle to another generally accepted accounting principle. To be more exact it is a change in how financial information is calculated, where the method of inventory pricing changes from FIFO to average-cost by choice or when the current principle used is no longer generally accepted. Changes in accounting principles can include inventory valuation or revenue recognition where changes are made with retrospective adjustments and the financial statements are restated. By altering the method of accounting principal a company must recast the prior years income numbers under the newly adopted method in the financial statement. To continue, a change in accounting estimates is defined as a normal recurring correction or adjustment of an asset or liability which is the natural result of the use of an estimate. Accountants use estimates in their reports when it is impractical to provide exact numbers therefore, there are many corrections that are made to provide more accurate estimations. In the financial statement, a company accounts for such changes in estimates in the period of change if they affect only that period or in the period of change and future periods if the change affects both. Unlike with changes in accounting principals, companies do not handle changes in estimates retrospectively and it does not require the restatement of earlier financial statements. It is a good thing to note that changes in estimates are not considered errors. what is your opinion?

2) A disposal of a component of a business should be disclosed as a discontinued operation in the income statement. Discontinued operations are defined as parts of a company's core business/ product line that has been shut down for future use. Since an operation has been discontinued, it must be reported separately from continuing operations on the income statement. However, discontinued operations must only be reported if the disposal represents a strategic shift that has or will have a major effect on the entity's operations and financial results. For example, a Discontinued sale of a product line must be reported in the income statement if it represents 15 percent of a companys total revenues. On page 4-13, the textbook mentions, A company that reports a discontinued operation must report on the face of the income statement the per share effect of income from continuing operations and net income. In addition, it must report per share amounts for discontinued items either on the face of the income statement or in the notes to the financial statements. Since discontinued operations can generate a total gain or loss for a company, it must be reported in relevance to income taxes. Also known as intraperiod tax allocation, it helps financial statement users better understand the impact of income taxes on the various components of net income especially in terms of discontinued operations. This tax allocation can be reported as a gain or loss although it is often a future tax benefit because discontinued operations often incur losses if left up and running. what is your opinion?