Indicate in what section of the income statement or retained earnings statement these items should be classified. Provide a brief rationale of your posiiton:

1. A merchandising company incorrectly overstated its ending inventory 2 years ago. Inventory for all other periods is correctly computed.

2. An automobile dearler sells for $137.000 an extremely rare 1930 S type Invicta which it purchased for $321,000 10 years ago. The Invicta is the only such display item the dealer owns.

3. A drilling company during the current year extended the estimated useful life of certain drilling equipment from 9 to 15 years. As a result, depreciation for the currrent year was materially lowered.

4. A retail outlet changed its computation for bad debt expense from 1% to 1/2 of 1% of sales because of changes in its customer clientele.

5. A mining concern sells foreign subsidiary engaged in uranium mining, although it (the seller) continues to engage in uranium mining in other countries.

6. A steel company changes from the average-cost method to the FIFO method for inventory costing purposes.

7. A construction company, at great expense, prepared major proposoal for government loan. The loan is not approved.

8. A water pump manufacturer has had large losses resulting from a strike by its employees earely in the year.

9. Depereciation for a prior period was incorrectly understated by $950,000. The error was discovered in the current year.

10. A large sheep rancher suffered a major loss because the state required that all sheep in the state be killed to halt the spread of a rare disease. Such a situation has not occurred in the state for 20 years.

11. A food distributor that sells whoesale to supermarket chains and to fast-food restaurants (two distinguishable classes of customers) decides to discontinue the division that sells to one of the two classes of customers. This represents strategic shift in the company business.