Students and instructor

Accounting choices have consequences

Teams start with the methods the instructor picked at setup, and can ask to change one, with a written reason. The instructor approves or declines, and an approved change is disclosed in the notes, as the standards require.

The Careless team switched depreciation to declining balance in Quarter 6. Depreciation rose from $2.4M to $4.2M a quarter, which on its own takes about $1.3M off after-tax profit. The machines, the orders and the sales are exactly the same. Only the reported expense moved.

The point for your course

A change in method moves reported profit, not the business. Students see it happen to a firm they know.

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Faculty › Spring Section B › Accounting methods Prof. Rivera · Faculty

Accounting method requests

Careless team

Waiting

Filed for the team by Sam Okafor, during Quarter 5. Applies from Quarter 6 if you approve now.

Method	Now	Requested
Depreciation method	Straight-line	Double-declining balance

Puts more depreciation in the early years and less later, so reported profit is lower early and higher later. Cash is unchanged.

The team's reason

"Our new line wears fastest in its first years, so most of its cost belongs early."

ApproveDecline

Every figure in this tour comes from a practice run of a reference course, played by the same engine a class uses, with the Careful, Average and Careless reference teams over 11 quarters. Names of students, instructors and firms are made up.