At the beginning of 2025, Coronado Construction Company changed from the cost-recovery method to recognizing revenue over time (percentage-of-completion) for financial reporting purposes. The company will continue to use the cost-recovery method for tax purposes. For years prior to 2025, pretax income under the two methods was as follows: percentage-of-completion $110,500, and cost-recovery $72,300. The tax rate is 30%. Coronado has a profit-sharing plan, which pays all employees a bonus at year-end based on 1% of pretax income. Compute the indirect effect of Coronado's change in accounting principle that will be reported in the 2025 income statement, assuming that the profit-sharing contract explicitly requires adjustment for changes in income numbers. Indirect effect $ eTextbook and Media Save for Later Attempts: 0 of 1 used Submit Answer

At the beginning of 2025, Coronado Construction Company changed from the cost-recovery method to recognizing revenue over time (percentage-of-completion) for financial reporting purposes. The company will continue to use the cost-recovery method for tax purposes. For years prior to 2025, pretax income under the two methods was as follows: percentage-of-completion $110,500, and cost-recovery $72,300. The tax rate is 30%. Coronado has a profit-sharing plan, which pays all employees a bonus at year-end based on 1% of pretax income. Compute the indirect effect of Coronado's change in accounting principle that will be reported in the 2025 income statement, assuming that the profit-sharing contract explicitly requires adjustment for changes in income numbers. Indirect effect eTextbook and Media Attempts: 0 of 1 used