On January $1,2025,$ Pharoah Corporation changed to the percentage$-$of$-$completion method of income recognition. This change is justified by Pharoah Corporation. On December $31,2024,$ Pharoah's Retained Earnings balance was $$1670000.$ Pharoah calculated that, if the percentage$-$of$-$completion method had been used, the accumulated impact on net income $($before taking into consideration any income tax effects$)$ would have been an additional $$370000.$ If Pharoah's income tax rate is $25\%,$ one of the impacts of this accounting change would be

an increase to the Retained Earnings balance on December $31,2024,$ of $$370000.$

a decrease to the Retained Earnings balance on December $31,2024,$ of $$370000.$

$$ an increase to Construction in Progress of $$1670000$ on December $31,2024.$

an increase to Construction in Progress of $$370000$ on December $31,2024.$

Your answer is incorrect.

On January $1,2022,$ Ivanhoe Corporation acquired machinery for $$1500000.$ Ivanhoe adopted the straight$-$line method of depreciation for this machine and had been recording depreciation over an estimated life of ten years, with no residual value. At the beginning of $2025,$ a decision was made to change to the double$-$declining balance method of depreciation for this machine.

Assuming a $20\%$ tax rate, the cumulative effect of this accounting change on beginning retained earnings, is

$$225600.$

$$282000.$

$$0.$

$$168000.$