Brookshire Brothers Holding, Inc. and Subsidiaries - Page 8




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               However, notwithstanding the breadth of these definitions,             
          the regulations also offer the following caveat:  “Although a               
          method of accounting may exist under this definition without the            
          necessity of a pattern of consistent treatment of an item, in               
          most instances a method of accounting is not established for an             
          item without such consistent treatment.”  Id.  Moreover, the                
          regulatory text details certain types of adjustments, with                  
          examples thereof, that are specifically excluded from                       
          characterization as changes in accounting method:                           
               A change in method of accounting does not include                      
               correction of mathematical or posting errors, or errors                
               in the computation of tax liability (such as errors in                 
               computation of the foreign tax credit, net operating                   
               loss, percentage depletion or investment credit).                      
               Also, a change in method of accounting does not include                
               adjustment of any item of income or deduction which                    
               does not involve the proper time for the inclusion of                  
               the item of income or the taking of a deduction.  For                  
               example, corrections of items that are deducted as                     
               interest or salary, but which are in fact payments of                  
               dividends, and of items that are deducted as business                  
               expenses, but which are in fact personal expenses, are                 
               not changes in method of accounting.  In addition, a                   
               change in the method of accounting does not include an                 
               adjustment with respect to the addition to a reserve                   
               for bad debts or an adjustment in the useful life of a                 
               depreciable asset.  Although such adjustments may                      
               involve the question of the proper time for the taking                 
               of a deduction, such items are traditionally corrected                 
               by adjustments in the current and future years. * * * A                
               change in the method of accounting also does not                       
               include a change in treatment resulting from a change                  
               in underlying facts.  On the other hand, for example, a                
               correction to require depreciation in lieu of a                        
               deduction for the cost of a class of depreciable assets                
               which had been consistently treated as an expense in                   
               the year of purchase involves the question of the                      







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