Question
Cullen Construction Company, which began operations in 2014, changed from the completed-contract to the percentage-of-completion method of accounting for long-term construction contracts during 2015. For
Cullen Construction Company, which began operations in 2014, changed from the completed-contract to the percentage-of-completion method of accounting for long-term construction contracts during 2015. For tax purposes, the company employs the completed contract method and will continue this approach in the future. The appropriate information related to this change is as follows.
Pretax income
percentage-of-completion completed contract difference
2014 880000 590000 290000
2015 900000 480000 420000 Instructions (a) Assuming that the tax rate is 40%, what is the amount of net Income that would be reported in 2015?
(b) What entry(ies) are necessary to adjust the accounting records for the change in accounting principles?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started