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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 $($head accountant$)$ controller was asked by the company's chief executive officer $($CEO$)$ to determine the appropriate treatment of the change in 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 this 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:

$1.$ What is the difference in before$-$tax income between the CEO's and the controller's treatment of the situation?

$2.$ Is GAAP more likely to require the controller's approach of impairment or the CEO's approach of change in estimate?

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