The article focuses on an optimum switch from double declining balance to sum-of-the-years digits depreciation. Economists Bernhard Schwab and Robert E.G. Nicol developed this optimum switching rule. Such a switch in the method of tax depreciation was made available by the issuance of Revenue Procedure 67-40, effective October 23, 1967. Schwab and Nicol demonstrated that the present value of the tax savings can be increased by a timely switch from double-declining balance to sum-of-the-years digits depreciation. The optimum year to switch depends on the useful life of the asset, the salvage value taken into account for tax purposes, and the discount rate. This paper simplifies the mathematics presented by Schwab and Nicol, corrects and extends the results, and indicates the percentage increase in the present value of the tax savings which may be obtained by a timely change in the method of depreciation. The Internal Revenue Code authorizes the straight-line, the double-declining balance, and the sum-of-the-year digits methods of depreciation. Under the straight-line method, the depreciable basis is distributed evenly over the life of the asset.

The article focuses on optimum course requirements for nonaccounting majors. A research study was conducted at Ball State University in February 1970 which random sampled one-half of the 1969 graduates of the College of Business who were classified as marketing majors or minors, and general business administration majors or minors. The questionnaire was concerned with the relevance of accounting to the first occupation of the graduate. Not surprisingly, some of the graduates moved radically out of their areas of major and minor specialization. The returns also indicated that the area of general business administration was the minor field of many secondary teachers. The significance of these findings to college teachers and curriculum appears to be the need to provide a course in cost accounting concepts and the analysis of financial statements to nonaccounting majors except for those preparing for secondary teaching. The bookkeeping aspects of accounting should be deleted as they are not relevant to nonaccountants except for the little which may be necessary as background for the other topics.

This article presents a response to comments on the proposed a model of transfer pricing in a socialist economy setting. Over the years an enormous body of literature has accumulated on the limitations of market determined prices as an instrument for the administration of an economic system. There are problems when perfect competition and/or government intervention are present in addition to the problems that arise when these conditions do not exist. Considering the brevity of Kenneth Most's comment, it is remarkable for its coverage of the literature on the subject. Furthermore, it may be useful to be reminded of the fact that these problems do not disappear when a socialist government employs transfer prices to facilitate the administration of its economy. How such a system would deal with these problems and whether these solutions would be more or less effective than the solutions available to a regulated capitalist economy is a subject for further research. A. Rashad Abdel-khalik argues that under the conditions specified, it appears that the proposed transfer price system will augment the employees' bonus for any period as compared to the preceding period by a function of the unfavorable deviation in fixed costs in period. If this statement were correct, the transfer price system would be less than useless, since a firm's management could maximize its income by maximizing costs. Abdel-khalik's argument is incorrect, but his concern with the control of organization costs is well placed.

Presents a foreword for the October 1971 issue of the periodical "The Accounting Review."

Reviews the book "Financial Policy Decisions," by Harold Bierman.

Reviews the book "The First Henry Ford: A Study in Personality and Business Leadership," by Anne Jardim.

The article focuses on a report of the Committee on Establishment of an Accounting Commission. The charge to this committee, as formulated by the American Accounting Association Executive Committee at its August 1970 meeting, is to consider the feasibility and desirability of establishing a Commission to study and recommend an organizational structure for advancing the formulation and modification of generally accepted accounting principles and the issuance of authoritative pronouncements concerning the application of such principles. If the committee recommends that such a Commission should be formed, the committee also should recommend the objectives, method of selecting members, and means of financing the work of the Commission. At the present time, accounting principles are formulated largely by the Accounting Principles Board. Inevitably, therefore, any dissatisfaction with methods of formulating principles is tantamount to dissatisfaction with the Board. High on its agenda for 1971 are other problems which currently obscure the effective disclosure of financial performance, such as the treatment of inter-corporate investments, financial reporting by diversified companies and others.