Ch 20 Case Study

Domingo Corporation changed the way it depreciates its computers from the sum-of-the-years-digits method to the straight-line method beginning January 1, 2018. Domingo also changed its estimated residual value used in computing depreciation for its office building. At the end of 2018, Domingo changed the specific subsidiaries constituting the group of companies for which its consolidated financial statements are prepared.

Required:

For each accounting change Domingo undertook, indicate the type of change and how Domingo should report the change. Be specific.

Why should companies disclose changes in accounting principles?