a.  Change in accounting policy usually relate to a change of principle, basis or rule being applied by an entity.   Change in accounting estimate is a reassessment of the expected future benefits and obligations associated with an asset or a liability. For example, a change in depreciation method from straight-line to reducing balance is a change in accounting policy. However, a change in estimated useful life of a specific asset is a change in accounting estimate.

b. (i) The change of estimated useful life of non-current asset is kind of change in accounting estimate. An  annual review of appropriateness of useful life is normally required for companies. If the revision of useful life is based on genuine assessment by production manager, that will be acceptable. But if it’s purpose is simply to improve profit,that will not be acceptable. The correct calculation of depreciation for current year is: (48-48/4)/(8-1)=$5.14 million. So depreciation is still required for this year.

(ii) The change of inventory valuation method is a kind of change in accounting policy. Generally a change in accounting policy should be avoided unless it is required by a new or revised accounting standard or new policy provide more relevant and reliable information. According to the accountant, change from FIFO to AVCO will improve profit by $2 millions. But actually both opening and closing inventory should be measured at AVCO which may not affect profit ((28-26)-(15-13)=0). So the accountant’s suggestion is not appropriate for Tina.