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Your client has asked you to provide guidance on the following potential accounting changes:(1) Change from straight-line method of depreciation to sum-of-the-years'-digits(2) Change from the cash basis to accrual basis of accounting(3) Change from FIFO to LIFO method for inventory valuation purposes(4) Change from presentation of statements of individual companies to presentation of consolidated statements(5) Change due to failure to record depreciation in a previous period(6) Change in the realizability of certain receivables(7) Change from LIFO to FIFO method for inventory valuation purposesREQUIRED:For each of the items above:• Indicate the type of accounting change, using one of the following codes:E - Change in estimateEP - Change in estimate resulting from change in principleN - Not an accounting change (correction of an error)PP - Change in principle reported prospectivelyPR - Change in principle reported retrospectivelyR - Change in reporting entity• Indicate whether or not restatement of prior year financial statements is necessary.• Indicate whether the cumulative effect on prior years' income is reported.
3. Yarman Inc. began business on January 1, 2013. Its pretax financial income for the first 2 years was as follows:2013 $ 95,0002014 $180,000
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