Mathys Inc. has recently hired a new independent auditor, Karen Ogleby, who says she wants $"$to get everything straightened out." Consequently, she has proposed the following accounting changes in connection with Mathys Inc.$\text{'}$s $2025$ financial statements.

$($a$)$

Correct Answer

Your answer is correct.

For each of the changes described below, decide whether:

The change involves an accounting principle, accounting estimate, or correction of an error.

Restatement of opening retained earnings is required.

$(1)$

$(2)$

At December $31,2024,$ the client had a receivable of $$820,000$ from Hendricks Inc. on its balance sheet. Hendricks

Inc. has gone bankrupt, and no recovery is expected. The rlient nronoses to write off the rereivable as a nrior neriod