Question: Cullen Construction Company, which began operations in 2014, changed from the completed-contract to the percentage-of-completion method of accounting for long-term construction contracts during 2015. For

Cullen Construction Company, which began operations in 2014, 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. The appropriate information related to this change is as follows.

Instructions
(a) Assuming that the tax rate is 40%, 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 accountingprinciple?

Pretax Income 2014 2015 Percentage-of-Completion $880,000 900,000 Completed-Contract Difference $290,000 420,000 $590,000 480,000

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