Identification and Effects of Changes and Errors
Response to the following problem:
The following are several independent events:
1. Change from the LIFO to the FIFO inventory cost flow assumption.
2. Reduction in remaining service life of machinery from 10 to 8 years.
3. A change from an accelerated method to the straight-line method of depreciating assets.
4. Write-down of inventories because of obsolescence.
5. Receipt of damages won in a court suit instigated five years ago.
6. Recording as an asset costs that were erroneously expensed in a previous period.
7. Write-down of property, plant, and equipment because of closure of inefficient plants.
8. A change from successful efforts to full cost accounting for oil exploration costs.
Required
Indicate how a company reports the preceding items (specify whether increases or decreases can generally be expected) in its financial statements of the current year.