Identify whether each of the below items is a change in principle, a change in estimate, or an error. Explain why each of the above items is a change in principle, a change in estimate, or an error.
1. The vice president of sales had indicated that one product line has lost its customer appeal and will be phased out over the next 3 years. Therefore, a decision has been made to lower the estimated lives on related production equipment from the remaining 5 years to 3 years.
2. The Hightone Building was converted from a sales office to offices for the Accounting Department at the beginning of this year. Therefore, the expense related to this building will now appear as an administrative expense rather than a selling expense on the current year's income statement.
3. Estimating the lives of new products in the Leisure Products Division has become very difficult because of the highly competitive conditions in this market. Therefore, the practice of deferring and amortizing preproduction costs has been abandoned in favor of expensing such costs as they are incurred.
4. Management has decided to switch from the FIFO inventory valuation method to the LIFO inventory valuation method for all inventories.
5. When the year-end physical inventory adjustment was made for the current year, the controller discovered that the prior year's physical inventory sheets for an entire warehouse were mislaid and excluded from last year's count.
6. Palmer's Custom Division manufactures large-scale, custom-designed machinery on a contract basis. Management decided to switch from the completed-contract method to the percentage-of-completion method of accounting for long-term contracts.