Environmental Corporation specializes in the production and sale of ecofriendly packaging. In 2017, Environmental reported net income (earnings) in excess of analyst expectations. This included a significant gain on sale of investments in the year and lower depreciation expense due to the company's change from the declining- balance method (used by competitors) to the straight-line method for depreciating its equipment. Answer the following questions based only on the information provided.

(a) From the perspective of an investor, does Environmental have high-quality earnings?

(b) Will the earnings reported by Environmental be discounted in the capital markets?