Dream Home Inc., a real estate development company, used to account for its long-term contracts using the contract completed before 2015 method. In early 2015, it switched to the percentage completion method. The company decided to continue to use the completed contract for income tax purposes. The enacted tax rate is 40%. Pre-tax income under both methods for the past three years is listed below.

                                                     2013            2014                     2015

Contract completed                $300,000        $200,000             $100,000

Percentage of completion         500,000         250,000               180,000

What amount will be charged to the Construction in Progress account, to register the change in early 2015?

Answer rating: 100% (QA)

For 2013 and 2014 the company was using the contract complet... View the full answer