Bryant Construction Company changed from the costrecovery to the percentage-of-completion method of accounting for long-term construction contracts during 2015. For tax purposes, the company employs the cost-recovery method and will continue this approach in the future. The 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 accounting policy?

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2014 2015 Pretax Income from Percentage-of-Completion Cost-Recovery Difference $980,000 $730,000 $250,000 900,000 480,000 420,000