In the blank to the left of each question, fill in the letter from the following list which best describes the presentation of the item on the financial statements of Helton Corporation for 2016.

1. Change in estimate

2. Prior period adjustment (not due to change in principle)

3. Retrospective type accounting change with note disclosure

4. None of the above

• ____ 1.

• ____ 2.

• ____ 3.

• ____ 4.

• ____ 5.

In 2016, the company changed its method of recognizing income from the cost-recovery method to the percentage-of-completion method.

At the end of 2016, an audit revealed that the corporation's allowance for doubtful accounts was too large and should be reduced to 2%. When the audit was made in 2015, the allowance seemed appropriate.

Depreciation on a truck, acquired in 2013, was understated because the useful life had been overestimated. The understatement had been made in order to show higher net income in 2014 and 2015.

The company switched from an average-cost to a FIFO inventory valuation method during the current year.

In the current year, the company decides to change from expensing certain costs to capitalizing these costs, due to a change in the period benefited.