At the beginning of $2022,$ the Healthy Life Food Company purchased equipment for $$42$ million to be used in the manufacture of a new line of gourmet frozen foods. The equipment was estimated to have a $10-$year service life and no residual value. The straight$-$line depreciation method was used to measure depreciation for $2022$ and $2023.$

Late in $2024,$ it became apparent that sales of the new frozen food line were significantly below expectations. The company decided to continue production for two more years $(2025$ and $2026)$ and then discontinue the line. At that time, the equipment will be sold for minimal scrap values.

The controller was asked by$,$ the company$$s chief executive officer $($CEO$),$ to determine the appropriate treatment of the change in the service life of the equipment. The controller determined that there has been an impairment of value requiring an immediate write$-$down of the equipment of $$12,900,000.$ The remaining book value would then be depreciated over the equipment$$s revised service life.

The CEO does not like the controller's conclusion because of the effect it would have on $2024$ income. $$Looks like a simple revision in service life from $10$ years to $5$ years to me$,$ The CEO concluded. $$Let$$s go with it that way.$$

Required

What is the difference in before$-$tax income between the CEO$$s and the controller's treatment of the situation?

Discuss the Controller's ethical dilemma.

Identify those stakeholders impacted by the Controller's decision.

Is GAAP more likely to require the controller's approach of impairment or the CEO's approach of change in estimate?