prior years, the company did not have sufficient documentation to be able to apply component accounting, and the appraisers were not able to determine this information. 3. One division of Luftsa Corp, Rosentiel Co., has consistently shown an increasing net income from period to period. On closer examination of its operating statement, Mi Reiners noted that inventory obsolescence charges are much lower than in other divisions. In discussing this with the division's controller, Ali learned that the controller lcnow ingly malces low estimates related to the writeoff of inventory in order to manage his bottom line. 4. In 2011, the company purchased new machinery that is expected to increase production dramatically, particularly in the early years. The company has decided to depreciate this machinery on an accelerated basis, even though other machinery is depreciated on a straightline basis. 5. All products sold by Luftsa are subject to a threeyear warranty. It has been estimated that the expense ultimately to be incurred on these machines is 1% of sales. In 20] 1, because of a production breakthrough, it is now estimated that 0.5% of sales is sufcient In 2009 and 2010, warranty expense was calculated as $64,000 and $?0,000, respectively. The company now believes that warranty costs should be reduced by 50%. 6. In reviewing the capital asset ledger in another division, Usher Division, Ali found a series of unusual accounting changes in which the useful lives of assets were substantially reduced when halfway through the original life estimate. For example, the useful life of one truck was changed from 10 to t5 years during its fth year of service. The divisional manager, who is compensated in large part by bonuses, indicated on imrestigation, \"It's perfectly legal to change an accounting estimate. We always have better information after time has passed." Instructions Mi Reiners has come to you for advice about each of the situations. Prepare a memorandum to the controller, indicating the appropriate accounting treatment that should be given to each situation. For any situations where there might be eth ical considerations, identifyr and assess the issues and suggest what should be done