Exercise 1. For each item below mark the appropriate box that indicates whether the item is an error or a change.

Change in ErrorPrincipleEstimateEntity1.Estimated warranty expense is increased from 2% to 3%. 2.A company fails to accrue interest on a note payable. 3.A corporation chooses to increase the estimated useful life of equipment from five years to ten years. 4.Ending inventory is overstated. 5.A division of a corporation is sold off and two new divisions are acquired. 6.A new pension standard, which significantly alters accounting for pensions, is adopted by a corporation. 7.A company changes from weighted-average to LIFO inventory method. 8.A corporation merges with another corporation, but retains the same name. 9.A company changes from straight-line depreciation to double declining balance. 10.A corporation changes the way in which it accounts for service contracts, but the change in method is inseparable from a change in estimate.