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Dream Home Inc., a real estate developing company, was accounting for its long-term contracts using the completed contract method prior to 2015. In 2015, it
Dream Home Inc., a real estate developing company, was accounting for its long-term contracts using the completed contract method prior to 2015. In 2015, it changed to the percentage-of-completion method. The company decided to use the same for income tax purposes. The tax rate enacted is 40%. Income before taxes under both the methods for the past three years appears below.
| 2013 | 2014 | 2015 | ||||
| Completed contract | $300,000 | $200,000 | $100,000 | |||
| Percentage-of-completion | 500,000 | 250,000 | 180,000 |
Which of the following will be included in the journal entry made by Dream Home to record the income effect?
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