1. Change in Accounting Principles (each question should be followed by citation numbers )

As part of the year-end accounting process and review of operating policies, Cullen Co. is considering a change in the accounting for its equipment from the straight-line method to an accelerated method. Your supervisor wonders how the company will report this change in principle. He read in a newspaper article that the FASB has issued a standard in this area and has changed GAAP for a change in estimate that is effected by a change in accounting principle. (Thus, the accounting may be different from what he learned in intermediate accounting.) Your supervisor wants you to research the authoritative guidance on a change in accounting principle related to depreciation methods.

1. Identify the main authoritative guidance for accounting and reporting guidelines for a change in accounting principle related to depreciation methods?
2. Is a change of depreciation method a change in accounting principle or a change in estimate?

(c) What are the conditions that justify a change in depreciation method, as contemplated by Cullen Co.?

(d) What guidance does the SEC provide concerning the impact that recently issued accounting standards will have on the financial statements in a future period?