Change in Principle—Long-Term Contracts Cherokee Construction Company changed from the completed-contract to the percentage-of-completion method of accounting for long-term construction contracts during 2010. 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

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Change in Principle—Long-Term Contracts Cherokee Construction Company changed from the completed-contract to the percentage-of-completion method of accounting for long-term construction contracts during 2010. 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.

(a) Assuming that the tax rate is 35%, what is the amount of net income that would be reported in 2010?

(b) What entry (ies) are necessary to adjust the accounting records for the change in accounting principle?

Related Book For answer-question

Intermediate Accounting

13th Edition

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

ISBN: 978-0470423684