Unusual Events During November, Stable Trucking Corporation reported a gain of $45,000 as a result of changing from one generally acceptable accounting principle to another. Also during November, Stable Trucking reported a loss of $38,000 as a result of an accident in which a nearly new cement transport truck was destroyed.

a. The president of Stable Trucking thinks the $45,000 gain should be reported as a cumulative adjustment somewhere in the income statement. When are cumulative adjustments reported? Does this change qualify as a cumulative adjustment? Explain.

b. The president also thinks the $38,000 loss on the accident should be reported as an extraordinary item. When are extraordinary items reported? Does this accident qualify as an extraordinary item? Explain.