Descnbed below are six independent and unrelated situations involving accounting changes. Each change occurs during 2016 before any adjusting entries or closing entries were prepared. Assume the tax rate for each company is 40% in all years. Any tax effects should be adjusted through the deferred tax liability account. Fleming Home Products introduced a new line of commercial awnings in 2015 that carry a one-year warranty against manufacturer's defects. Based on industry experience, warranty costs were expected to approximate 2% of sales. Sales of the awnings in 2015 were $3,600,000. Accordingly, warranty expense and a warranty liability of $72,000 were recorded in 2015. In late 2016, the company's claims experience was evaluated and it was determined that claims were far fewer than expected: 1% of sales rather than 2%. Sales of the awnings in 2016 were $4,100,000 and warranty expenditures in 2016 totaled $93,275 a. b. On December 30, 2012, Rival Industries acquired its office building at a cost of $1,020,000. It was depreciated on a straight-line basis assuming a useful life of 40 years and no salvage value. However plans were finalized in 2016 to relocate the company headquarters at the end of 2020. The vacated office building will have a salvage value at that time of $710,000 Hobbs-Barto Merchandising, Inc., changed inventory cost methods to LIFO from FIFO at the end of 2016 for both financial statement and income tax purposes. Under FIFO, the inventory at January 1 c. 2016, is $700,000 At the beginning of 2013, the Hoffman Group purchased office equipment at a cost of $341,000. Its useful life was estimated to be 10 years with no salvage value. The equipment was depreciated by the sum-of-the-years'-digits method. On January 1, 2016, the company changed to the straight-line method. d. e. In November 2014, the State of Minnesota filed suit against Huggins Manufacturing Company, seeking penalties for violations of clean air laws. When the financial statements were issued in 2015, Huggins reached a settlement with state authorities, but legal counsel advised probable the company would have to pay $210,000 in penalties. Accordingly, the following entry was recorded 210,000 Loss-litigation 210,000 Liability-litigation Late in 20 16, a settlement was reached with state authorities to pay a total of $361,000 in penalties. At the beginning of 2016, Jantzen Specialties, which uses the sum-of-t to the straight-line method for newly acquired buildings and equipment. The change increased current year net earnings by $456,000 f. ties, which uses the sum-of-the-years'-digits method, changed