Change in Estimate versus Error Correction- LandCo is a lawn service company which provides grounds and maintenance services to a range of corporate customers. Customers are expected to pay on the first of each month, in advance of receiving services. One of LandCos corporate customers is an eldercare facility whose grounds the company has maintained for many years. The customer has not paid for the last three months of service (from October December 2019); nevertheless, to maintain a positive relationship, LandCo continued to provide mowing and weed control services to the eldercare facility during that time. LandCo ceased providing services in January 2020 and found out in that same month that the eldercare facility filed for bankruptcy in September. LandCo now believes that collection of the missed payments is extremely unlikely.

LandCo has already issued financial statements to lenders (for the period ending 12/31/2019) which reflected revenue and a corresponding account receivable related to this customer of $10,000 per month for services provided. Those financial statements also reflected the companys standard allowance (reserve) amount on receivables, of 4% of sales. In total, LandCos average monthly sales amount to $500,000.

Required:

1- Evaluate whether receipt of this information indicates you have a change in estimate or the customer's bankruptcy results in this event being considered an error in previously issued financial statements. Describe the accounting treatment required by the Codification for each alternatives with draft journal entries.

2- Research US accounting standards to determine the proper treatment for the service receivable/customer bankruptcy on LandCos financial statements, assuming it is headquartered in the United States.

3- Research international accounting standards to determine the proper treatment for LandCos transactions, assuming it is headquartered in France.