Concord Construction Company changed from the cost-recovery to the percentage-of-completion method of accounting for long- term construction contracts during 2026. For tax purposes, the company employs the cost-recovery method and will continue this approach in the future. (Hint: Adjust all tax consequences through the Deferred Tax Liability account.) The appropriate information related to this change is as follows. 2025 2026 Pretax Income from Percentage-of-Completion Cost-Recovery Difference $856,000 $615,000 $241,000 780,000 507,000 273,000 (a) (b) What entry is necessary to adjust the accounting records for the change in accounting principle? (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Debit Credit
Concord Construction Company changed from the cost-recovery to the percentage-of-completion method of accounting for long- term construction contracts during 2026. For tax purposes, the company employs the cost-recovery method and will continue this approach in the future. (Hint: Adjust all tax consequences through the Deferred Tax Liability account.) The appropriate information related to this change is as follows. 2025 2026 Pretax Income from Percentage-of-Completion Cost-Recovery Difference $856,000 $615,000 $241,000 780,000 507,000 273,000 (a) (b) What entry is necessary to adjust the accounting records for the change in accounting principle? (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Debit Credit
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter3: Taxes On The Financial Statements
Section: Chapter Questions
Problem 11P
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Transcribed Image Text:Concord Construction Company changed from the cost-recovery to the percentage-of-completion method of accounting for long-
term construction contracts during 2026. For tax purposes, the company employs the cost-recovery method and will continue this
approach in the future. (Hint: Adjust all tax consequences through the Deferred Tax Liability account.) The appropriate information
related to this change is as follows.
2025
2026
Pretax Income from
Percentage-of-Completion
Cost-Recovery
Difference
$856,000
$615,000
$241,000
780,000
507,000
273,000
(a)
(b)
What entry is necessary to adjust the accounting records for the change in accounting principle? (Credit account titles are
automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles
and enter O for the amounts. List all debit entries before credit entries.)
Account Titles and Explanation
Debit
Credit
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