7. Banko Construction Company has used thecost recovery method of accounting since itbegan operations in 2008. In 2011, forjustifiable reasons, management decided toadopt the percentage of completion method.The following schedule, reporting income forthe past 3 years, has been prepared by theentity. Ignoring income tax, what is thecumulative effect of change in accountingpolicy that should be reported in 2011statement of retained earnings?20082009201040,000,00025,000,00042,000,000Total revenue fromcompleted contractsLess: Cost of(18,000,000)(29,000,000)(28,000,000)completed contractsIncome from7,000,00013,000,00012,000,000operationsCasualty loss(2,000,000)Income7,000,00013,000,00010,000,000Analysis of the accounting records disclosed the following income by contracts, earned in the years 2008 to 2010 usingthe percentage of completion method.200820092010Contract 17,000,000Contract 25,000,0008,000,000Contract 33,000,0007,000,0002,000,000Contract 41,000,0006,000,000Contract 5(1,000,000)a. 6,000,000b. 8,000,000c. 7,000,000O d.o

Banko construction company has used cost recovery method of accounting since it began its operations…

7. Banko Construction Company has used the cost recovery method of accounting since it began operations in 2008. In 2011, 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 entity. Ignoring income tax, what is the cumulative effect of change in accounting policy that should be reported in 2011 statement of retained earnings? 2008 2009 2010 40,000,000 Total revenue from completed contracts 25,000,000 42,000,000 Less: Cost of (18,000,000) (29,000,000) (28,000,000) completed contracts Income from 7,000,000 13,000,000 12,000,000 operations Casualty loss (2,000,000) Income 7,000,000 13,000,000 10,000,000 Analysis of the accounting records disclosed the following income by contracts, earned in the years 2008 to 2010 using the percentage of completion method. 2008 2009 2010 Contract 1 7,000,000 Contract 2 5,000,000 8,000,000 Contract 3 3,000,000 7,000,000 2,000,000 Contract 4 1,000,000 6,000,000 Contract 5 (1,000,000) a. 6,000,000 Ob. 8,000,000 O c. 7,000,000 O d.o

7. Banko Construction Company has used the cost recovery method of accounting since it began operations in 2008. In 2011, 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 entity. Ignoring income tax, what is the cumulative effect of change in accounting policy that should be reported in 2011 statement of retained earnings? 2008 2009 2010 40,000,000 Total revenue from completed contracts 25,000,000 42,000,000 Less: Cost of (18,000,000) (29,000,000) (28,000,000) completed contracts Income from 7,000,000 13,000,000 12,000,000 operations Casualty loss (2,000,000) Income 7,000,000 13,000,000 10,000,000 Analysis of the accounting records disclosed the following income by contracts, earned in the years 2008 to 2010 using the percentage of completion method. 2008 2009 2010 Contract 1 7,000,000 Contract 2 5,000,000 8,000,000 Contract 3 3,000,000 7,000,000 2,000,000 Contract 4 1,000,000 6,000,000 Contract 5 (1,000,000) a. 6,000,000 Ob. 8,000,000 O c. 7,000,000 O d.o

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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