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Type of Change Situation 1. Change from declining balance depreciation to straight-line. 2. Change in the estimated useful life of office equipment. 3. Technological advance
Type of Change | Situation | |
1. | Change from declining balance depreciation to straight-line. | |
2. | Change in the estimated useful life of office equipment. | |
3. | Technological advance that renders worthless a patent with an unamortized cost of $45,000. | |
4. | Change from determining lower of cost or market for the inventories by the individual item approach to the aggregate approach. | |
5. | Change from LIFO inventory costing to the weighted-average inventory costing. | |
6. | Settling a lawsuit for less than the amount accrued previously as a loss contingency. | |
7. | Including in the consolidated financial statements a subsidiary acquired several years earlier that was appropriately not included in previous years. | |
8. | Change by a retail store from reporting warranty expense on a pay-as-you-go basis to estimating the expense in the period of sale. | |
9. | A shift of certain manufacturing overhead costs to inventory that previously were expensed as incurred to more accurately measure cost of goods sold. (Either method is generally acceptable.) | |
| 10. | Pension plan assets for a defined benefit pension plan achieving a rate of return in excess of the amount anticipated. |
Indicate with the appropriate letter the nature of each situation described below: |
Type of Change |
PR | Change in principle reported retrospectively |
PP | Change in principle reported prospectively |
E | Change in estimate |
EP | Change in estimate resulting from a change in principle |
R | Change in reporting entity |
N | Not an accounting change |
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