Question 3. Your audit manager asks you how to account for each of the following situations that current clients have encountered. You are to identify the appropriate accounting treatment of each independent situation (from choice 1 - 6 below) and describe to the manager how the specific situation should be handled in the financial statements (or not at all) in complete detail. Assume that each scenario has a material impact on the client's financial statements. 1. As an unusual gain or loss 2. As a prior period adjustment 3. As a change in accounting principle 4. As discontinued operations 5. As a change in accounting estimate 6. As a change in accounting estimate achieved by a change in accounting principle e. a. JC Penney's closed a third of its stores. b. American Airlines changed the useful lives of its planes from 10 years to 15 years. C. A client discovered that 2019's depreciation expense was overstated. d. Another client switched its inventory costing method from weighted average to FIFO. The company owning the Washington Post sold off its online education division to the Purdue University. f. A company making high-tech components for self-driving cars took an inventory write-down when Tesla decided to use a different technology. g. A company changed its depreciation method from sum-of-the-year's digits to straight-line. h. An exporter had to record a loss related to its accounts receivable denominated in pounds sterling Question 3. Your audit manager asks you how to account for each of the following situations that current clients have encountered. You are to identify the appropriate accounting treatment of each independent situation (from choice 1 - 6 below) and describe to the manager how the specific situation should be handled in the financial statements (or not at all) in complete detail. Assume that each scenario has a material impact on the client's financial statements. 1. As an unusual gain or loss 2. As a prior period adjustment 3. As a change in accounting principle 4. As discontinued operations 5. As a change in accounting estimate 6. As a change in accounting estimate achieved by a change in accounting principle e. a. JC Penney's closed a third of its stores. b. American Airlines changed the useful lives of its planes from 10 years to 15 years. C. A client discovered that 2019's depreciation expense was overstated. d. Another client switched its inventory costing method from weighted average to FIFO. The company owning the Washington Post sold off its online education division to the Purdue University. f. A company making high-tech components for self-driving cars took an inventory write-down when Tesla decided to use a different technology. g. A company changed its depreciation method from sum-of-the-year's digits to straight-line. h. An exporter had to record a loss related to its accounts receivable denominated in pounds sterling