Cherokee Construction Company changed from the cost-recovery to the percentage-of-completion method of accounting for long-term construction contracts

Question:

Cherokee Construction Company changed from the cost-recovery to the percentage-of-completion method of accounting for long-term construction contracts during 2019. For tax purposes, the company employs the cost-recovery method and will continue this approach in the future. The appropriate information related to this change is as follows.

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Instructions

a. Assuming that the tax rate is 35%, what is the amount of net income that would be reported in 2019?

b. What entry(ies) is necessary to adjust the accounting records for the change in accounting policy?

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Related Book For  book-img-for-question

Intermediate Accounting IFRS

ISBN: 978-1119372936

3rd edition

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

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