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1)  Define a change in estimate and provide an illustration.  When is a change in accounting estimate effected by a change in accounting principle?

2) Shannon, Inc., changed from the LIFO cost flow assumption to the FIFO cost flow assumption in 2014.  The increase in the prior year’s income before taxes in $1,200,000.  The tax rate is 40%.  Prepare Shannon’s journal entry to record the change in accounting principle.

3) Sesame Company purchased a computer system for $74,000 on January 1, 2013.  It was depreciated based on a 7 year life and an $18,000 salvage value.  On January 1, 2015, Sesame revised these estimates to a total useful life of 4 years and a salvage value of $10,000.  Prepare Sesames’s entry to record the 2015 depreciation.

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