Bryant Construction Company changed from the cost-recovery to the percentage-of-completion method of accounting for long-term construction contracts during 2010. For tax purposes, the company employs the cost-recovery method and will continue this approach in the future. The information related to this change is as follows.

Instructions
(a) Assuming that the tax rate is 40%, what is the amount of net income that would be reported in 2010?
(b) What entry (ies) are necessary to adjust the accounting records for the change in accountingpolicy?

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Pretax Income from 2009 2010 Percentage-of-Completion $980,000 900,000 Cost-Recovery Difference $250,000 420,000 $730,000 480,000