Jeanniebe Construction Company has used the cost recovery method of accounting since it began operations in...

 

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Jeanniebe Construction Company has used the cost recovery method of accounting since it began operations in 2000. In 2003, for justifiable reasons, management decided to adopt the percentage-of-completion method. The following schedule, reporting income for the past 3 years, has been prepared by the company. 2000 Income Total revenues from completed 25,000,000 42,000,000 40,000,000 contracts Contract 1 Contract 2 Contract 3 Contract 4 Contract 5 Less: Cost of completed contracts 18,000,000 29,000,000 28,000,000 Income from operations 7,000,000 13,000,000 12,000,000 Extraordinary loss 0 (2,000,000) 7,000,000 13,000,000 10,000,000 Analysis of the accounting records disclosed the following income by contracts, earned in the years 2000-2002 using the percentage-of-completion method. 2000 2001 2001 0 2002 7,000,000 5,000,000 8,000,000 3,000,000 7,000,000 1,000,000 2002 2,000,000 6,000,000 (1,000,000) What should be the cumulative effect of change in accounting policy that should be reported in 2003 statement of retained earnings? (Ignore income tax) Jeanniebe Construction Company has used the cost recovery method of accounting since it began operations in 2000. In 2003, for justifiable reasons, management decided to adopt the percentage-of-completion method. The following schedule, reporting income for the past 3 years, has been prepared by the company. 2000 Income Total revenues from completed 25,000,000 42,000,000 40,000,000 contracts Contract 1 Contract 2 Contract 3 Contract 4 Contract 5 Less: Cost of completed contracts 18,000,000 29,000,000 28,000,000 Income from operations 7,000,000 13,000,000 12,000,000 Extraordinary loss 0 (2,000,000) 7,000,000 13,000,000 10,000,000 Analysis of the accounting records disclosed the following income by contracts, earned in the years 2000-2002 using the percentage-of-completion method. 2000 2001 2001 0 2002 7,000,000 5,000,000 8,000,000 3,000,000 7,000,000 1,000,000 2002 2,000,000 6,000,000 (1,000,000) What should be the cumulative effect of change in accounting policy that should be reported in 2003 statement of retained earnings? (Ignore income tax)

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