DRS Corporation changed the way it depreciates its computers from the sum-of-the-year’s-digits method to thestraight-line method beginning January 1, 2018. DRS also changed its estimated residual value used in computingdepreciation for its office building. At the end of 2018, DRS changed the specific subsidiaries constituting thegroup of companies for which its consolidated financial statements are prepared.Required:1. For each accounting change DRS undertook, indicate the type of change and how DRS should report thechange. Be specific.2. Why should companies disclose changes in accounting principles?
DRS Corporation changed the way it depreciates its computers from the sum-of-the-year’s-digits method to thestraight-line method beginning January 1, 2018. DRS also changed its estimated residual value used in computingdepreciation for its office building. At the end of 2018, DRS changed the specific subsidiaries constituting thegroup of companies for which its consolidated financial statements are prepared.Required:1. For each accounting change DRS undertook, indicate the type of change and how DRS should report thechange. Be specific.2. Why should companies disclose changes in accounting principles?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
DRS Corporation changed the way it depreciates its computers from the sum-of-the-year’s-digits method to the
straight-line method beginning January 1, 2018. DRS also changed its estimated residual value used in computing
group of companies for which its consolidated financial statements are prepared.
Required:
1. For each accounting change DRS undertook, indicate the type of change and how DRS should report the
change. Be specific.
2. Why should companies disclose changes in accounting principles?
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