Power Construction Company was established on Jan. 1 2018. Since inception the cost-recovery method has been used. On Jan. 1 2020 the company decided to change from the cost-recovery method to the percentage-of-completion method for financial reporting purposes. The company will continue to use the cost-recovery method for tax purposes. The following is the pre-tax income under both methods for 2018 and 2019.

The comparative statements of financial position for SUN Company showed the following information. Additional information concerning transactions and events during 2021 are presented below.

	2021	2020	CHANGE
Buildings	350,000	250,000	100,000
Accumulated depreciationbuildings and equipment	(40,000)	(25,000)	-15,000
Land	15,000	20,000	-5,000
Cash	340,000	70,000	270,000
Prepaid expenses	20,000	10,000	10,000
Inventory	70,000	60,000	10,000
Accounts receivable (net)	150,000	100,000	50,000
Total Assets	905,000	485,000
Share capital-ordinary, 10 par	400,000	100,000	300,000
Retained earnings	65,000	45,000	20,000
Notes payable-Long-term	300,000	200,000	100,000
Loan Payable - Long-term	10,000	50,000	-40,000
Accrued expenses	50,000	30,000	20,000
Accounts payable	80,000	60,000	20,000
Total Liabilities & Shareholders' Equity	905,000	485,000

Additional data:

1. Purchased Building for $150,000, paid $50,000 and signed a Notes Payable for the balance. Sold Buildings (cost= $50,000, Book Value =$45,000) for $65,000 cash.

2. Sold Land for cash at a gain of $5,000. No land was purchased during the year.

3. Issued Shares for cash.

Dividends Declared and paid during the year $10,000

For 2020 pre-tax income under the new percentage-of-completion method was $3,000,000. The tax rate is 45%.

On Jan. 1 2020 the company also changed the estimated useful life of it building from a total of 20 years to a total of 25 years. It also revised its salvage (residual value) from $50,000 to $41,000. The building has been in use for 2 years and had an original cost of $500,000. The company is presenting financial statements for 2020 only.