Explain how a prepayment for a three-year insurance policy is treated on the books, and compare this treatment to the method used to account for the purchase of a piece of equip¬ ment. You will note that both treatments involve capitalizing and amortizing. Which of the two is a more straightforward application of the matching principle? Why? Which of the two involves more uncertain estimates, giving the manager greater discretion over the pre¬ sentation of the financial statements?