Problem 1-Accounting Changes and Correction of Errors (10 points) Possible Points Your Points 1 1.If a Company changes from an inappropriate accounting principle to an appropriate accounting principle in the preparation of its latest financial statements, is this change a change in accounting principle or a correction of an accounting error?Why? 2 2.Provide 3 specific examples of changes in accounting principle. 1 3.There are two approaches acceptable under US GAAP to reporting accounting changes.When is the prospective approach to reporting an accounting change allowable?

Be specific and provide an example requiring the use of the prospective approach to reporting an accounting change. 4.The 123 Company purchased a piece of equipment on January 1, 2018 for ... $75,000 The accountant improperly expensed this purchase as operating expenses during 2018. The equipment has no salvage value and a useful life of (in years)........... 10 123 Company has a corporate average effective income tax rate of ....... 35% 123 Company operates and reports its financial statements on a calendar year. After the 2018 financial statements are issued and after 123 Company has closed its books for 2018, the Company discovered the above error. 3 a) Prepare the first journal entry 123 Company would record during 2019 on its books to correct this error? 1 b) How much depreciation expense would 123 Company record during 2019 for this piece of equipment? 1 c) Would 123 Company report this correction of an error on a retrospective or a prospective basis?Why? 1 5.If there has been a change in the Reporting Entity, how are these changes reported under US GAAP-on a Retrospective or a Prospective Basis?