Reporting Accounting Changes--the Right Way.

The article presents information related to accounting changes that are taking place in the U.S. Changes in the accounting methods employed by a particular company in successive accounting periods have been much in the news in recent months. And not all of the news coverage has reflected favorably on the accounting profession. Some of the criticism of the profession, whether implicit or explicit, for permitting changes in accounting methods stems from a failure of corporate management to give a complete explanation and justification of these changes. It is refreshing, therefore, to observe the effort that Dresser Industries Inc., took in its interim report to shareholders for the first quarter of fiscal 1969 to give a detailed explanation of a change in depreciation policy. "In 1964, the management adopted a policy to protect the company against the impact of obsolescence of assets. It was decided that depreciation expenses should be absorbed in the early life of assets, through the use of accelerated depreciation, the method already in use for tax purposes. The effect of double-declining depreciation is magnified when there is a substantial increase in expenditures for short-life assets, such as is planned for the next several years.