MG is an accrual basis corporation. In 2016, it wrote off a $65,000 account receivable as uncollectible. In 2017, it received a $65,000 check from the creditor in full payment of this receivable.
a. What was the effect of the write-off on MG’s 2016 financial statement income and taxable income?
b. What was the effect of the collection of the receivable on MG’s 2017 financial statement income and taxable income?