An annual report for Ford Motor Company included the following information:

Required: 1. What was the stated reason for the change in method? What other factors do you think management considered when it decided to make this accounting change? 2. Do you think this is an ethical decision? 3. Who were affected by the change and how were they benefited or harmed? 4. What impact did this change have on cash flows for Ford? 5. As an investor, how would you react to the fact that Ford's net income will increase by $80 to

$100 million as the result of this change?

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Note 6. Net Property, Depreciation and Amortization-Automotive Assets placed in service before January 1. 1993, are depreciated using an accelerated method. Assets placed in service beginning in 1993 will be depreciated using the straight- line method of depreciation. This change in accounting principle is being made to reflect improvements in the design and flexibility of manufacturing machinery and equipment and improvements in maintenance practices. These improvements have resulted in more uniform productive capacities and maintenance costs over the useful life of an asset. Straight-line is preferable in these circumstances. The change is expected to improve 1993 after-tax results by $80 to $100 million.