Answer the questions about each of the following items related to a company’s activities for the year:
a. After using an expected useful life of seven years and no residual value to depreciate its office equipment over the preceding three years, the company decided early this year that the equipment would last only two more years. How should the effects of this decision be reported in the current financial statements?
b. An account receivable in the amount of $180,000 was written off two years ago. It was recovered this year. The president believes this should be reported as an error. How should the proceeds be reported in the current year’s financial statements?