The various types of accounting changes may significantly affect the presentation of a companys financial statements and also affect the trends shown on its comparative financial statements and historical summaries.

Required:

1. Explain a change in accounting principle and how a company reports it in the period of the change.
2. Explain a change in accounting estimate and how a company reports it in the period of the change.
3. Explain a change in reporting entity and how a company reports it. Give an appropriate example of a change in reporting entity.