If you got her a new phone using insurance then you may not be able to use it since technically it belongs to the insurance company and is probably blacklisted. If you bought her a new phone (contract, DPP, or paid full retails upfront) then yes you should be able to use the found one.
I am glad to hear the device turned up as I have felt the pain of losing a phone many times. Was the phone replaced via an insurance claim?
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