Banko Company used the cost recovery method of accounting since it began operations in 2016. In 2019, management decided to adopt the percentage of completion method. 201620172018Revenue from completed contractsCost of completed contracts25,000,000 42,000,000 40,000,00018,000,000 29,000,000 28,000,0007,000,000 13,000,000 12,000,000Income from operationsCasualty loss00(2,000,000)Income7,000,00013,000,00010,000,000Analysis of the accounting records disclosed the following income by contracts using thepercentage of completion method.201620172018Contract 17,000,000Contract 25,000,0008,000,000Contract 33,000,0007,000,0002,000,000Contract 41,000,0006,000,000Contract 5(1,000,000)What amount of pretax cumulative effect of change in accounting policy should be reported inthe statement of retained earnings for 2019?

Percentage of completed method: Under this method, the revenues and expenses are reported…

Answered: Banko Company used the cost recovery…

Banko Company used the cost recovery method of accounting since it began operations in 2016. In 2019, management decided to adopt the percentage of completion method.

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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