Delta Oil Company uses the successful-efforts method to account for oil exploration costs. Delta started business in 2014 and prepared the following income statements:

The company choose to change to the full-cost method at the beginning of 2016. Under the full-cost method, Delta capitalizes all exploration costs of the Oil and Gas Properties asset account on its balance sheet. It determines the exploration and amortization expense amounts under the full-cost method to be as follows:

In addition, Delta reported revenue of $9,000,000 and other expenses of $4,200,000 in 2016. With the 2016 financial statements, the company issues comparative statements for the previous 2 years.
Required:
1. Prepare the journal entry to reflect the change.
2. Prepare the comparative income statements and the comparative statements of retained earnings for 2016, 2015, and 2014. Notes to the financial statements are not necessary.
3. Discuss the advantages and disadvantages of accounting for a change in this manner.

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2014 2015 Revenue Other expenses Exploration expenses Income before income taxes Income tax expense (30%) Net income $1,000,000 $3,000,000 400,000 300,000 238,000 462,000 438,600 336,000 $1,023400 $ 3.36 10.23 120,000 480,000 144,000 Earnings per share 2014 2015 2016 Exploration expense Amorization expense 18,200 42,000