The Long Island Construction Company has used the completed contract method of accounting for construction contracts. At the beginning of 2011, the company decides to change to the percentage-of-completion method for financial reporting purposes, but will continue to use the completed contract method for tax reporting. The following table presents information concerning the change. The income tax rate for all years is 40%.

Required:
1. Prepare the journal entry to record the change in accounting principle. (All tax effects should be reflected in the deferred tax liability account.)
2. Determine the net income to be reported in the 2011–2010 comparative income statements.
3. Which other 2010 amounts would be reported differently in the 2011–2010 comparative income statements and 2011–2010 comparative balance sheets than they were reported the previous year?
4. How would the change be reflected in the 2011–2010 comparative statements of shareholders' equity? Cash dividends were $1 million each year.