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?