Analysis Case 20–10 - DRS Corporation - Various changes ● LO1 through LO4
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, 2011. DRS also changed its estimated residual value used in
computing depreciation for its office building. At the end of 2011, DRS
changed the specific subsidiaries constituting the 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?
