Cherokee Construction Company changed from the cost-recovery to the percentage-of-completion method of accounting for long-term construction contracts
Question:
Cherokee Construction Company changed from the cost-recovery to the percentage-of-completion method of accounting for long-term construction contracts during 2010. For tax purposes, the company employs the cost-recovery method and will continue this approach in the future.
Instructions
(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) is necessary to adjust the accounting records for the change in accountingpolicy?
Transcribed Image Text:
Pretax Income from: 2009 2010 Percentage-of-Completion $780,000 700,000 Cost-Recovery Difference $170,000 220,000 $610,000 480,000
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a The net income to be reported in 2010 using the retrospective a...View the full answer
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Related Book For
Intermediate Accounting
ISBN: 978-0470616314
IFRS edition volume 2
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
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