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3. During 2013, a construction company changed fr...

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3. During 2013, a construction company changed from the completed-contract method to the percentage-of-completion method for accounting purposes but not for tax purposes. Gross profit figures under both methods for the past three years appear below: Completed-Contract Percentage-of-Completion 2011 $ 475,000 $ 700,000 2012 625,000 950,000 2013 700,000 1,050,000 $1,800,000 $2,700,000 Assuming an income tax rate of 40% for all years, the affect of this accounting change on prior periods should be reported by a credit of a. $540,000 on the 2013 income statement. b. $330,000 on the 2013 income statement. c. $540,000 on the 2013 retained earnings statement. d. $330,000 on the 2013 retained earnings statement

 

Paper#4413 | Written in 18-Jul-2015

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