Since Goode Oil Company was formed in 2015, it has used the full- cost method for financial reporting and recorded all exploration costs in an asset account called Oil and Gas Properties. At the beginning of 2017, it changes to the successful- efforts method. Goode previously had reported pretax income of $2,200,000 and $2,000,000 in 2015 and 2016, respectively.
Analysis of the accounting records discloses that the company incurred the following exploration expenses based on the successful-efforts method:

In 2017, Goode reported pretax income of $3,100,000 under the successful-efforts method. The tax rate is 30%. Goode has a simple capital structure with 100,000 shares of common stock outstanding. It paid no dividends.
Required:
1. Prepare the journal entry to reflect the change in method at the beginning of 2017.
2. If the company also presents the 2015 and 2016 financial statements for comparative purposes, prepare the income statement disclosures (starting with income before income taxes) and retained earnings disclosures that are required in 2017.
3. What items (if any) would be restated on the financial statements?

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2015 2016 Exploration expenses $550,000 $780,000