Accounting principles
Domingo Corporation changing from the normal depreciation to another method is a positive move to allow the company reduces its cost of operations and also reduce the risks related when computing. This kind of move is known as the accounting method change. The method of depreciating the costs involved is aimed to bring in profits and a reduction in the assets costs in a year. This should be reported through filing an IRS form which indicates the change, justification, and the supporting documents for the change.
The change in the method used to calculate the rate of estimated residue depreciation is known as the general depreciation method which is used in many cases to compute the depreciation rate of commercial buildings (Weygandt 570). This should be reported by way of giving the rate of depreciation and the tax depreciation level. The consolidated and the separate financial statements describes ways in which an entity has to consolidate another entity, changing of the account due to different owners, preparation of the separate financials and also the related disclosures. This change is known as the consolidated financial statement. This should be reported through a presentation of the statements to the IRA with an indication of the parent in presentation of the financial statement which has been consolidated in its investment subsidiaries.
Changing the accounting principles is a factor that affects the financial statements. The change in accounting method if not reported could be disastrous to the company. The accounting principles are important and relevant since they allow the reporting of the net loss or income therefore it is important to disclose the information relevant to the departments (Weygandt 577). The accounting principles also ensure that the companies do not cheat in any way while doing the financial reporting.
Work cited
Weygandt, Jerry J, Paul D. Kimmel, and Donald E. Kieso. Accounting Principles. , 2013. Print.
