Pam Erickson Construction Company changed from the completed-contract to the percentage-of-completion method of accounting for long-term construction

Question:

Pam Erickson Construction Company 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. (Hint: Adjust all tax consequences through the Deferred Tax Liability account.) The appropriate information related to this change is as follows.

                               

Instructions
  (a) Assuming that the tax rate is 35%, 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 principle?

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Related Book For  book-img-for-question

Intermediate Accounting

ISBN: 978-1118147290

15th edition

Authors: Donald E. Kieso, Jerry J. Weygandt, and Terry D. Warfield

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