Blossom Home Inc., a real estate developing company, was accounting for its long-term contracts using the completed contractmethod prior to 2024. In 2024, it changed to the percentage-of-completion method.The company decided to use the same for income tax purposes. The tax rate enacted is 20%. Income before taxes under both themethods for the past three years appears below.Completed contractPercentage-of-completionO $300000$1826672022$385000 $261000O $62000O $36200068500020233230002024$137000What amount will be debited to Construction-in-Process to record the change at the beginning of 2024?205000

Name: Blossom Home Inc., a real estate developing company, was accounting f
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Description: Blossom Home Inc., a real estate developing company, was accounting for its long-term contracts using the completed contractmethod prior to 2024. In 2024, it changed to the percentage-of-completion method.The company decided to use the same for inco

The following basic information as follows:-Method = Percentage of completion method Tax rate = 20%

Answered: hat amount will be debited to…

Business

Accounting

hat amount will be debited to Construction-in-Process to record the change at the beginning of 2024? O $300000 O $182667 O $62000

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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Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

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Question

Blossom Home Inc., a real estate developing company, was accounting for its long-term contracts using the completed contract
method prior to 2024. In 2024, it changed to the percentage-of-completion method.
The company decided to use the same for income tax purposes. The tax rate enacted is 20%. Income before taxes under both the
methods for the past three years appears below.
Completed contract
Percentage-of-completion
O $300000
$182667
2022
$385000 $261000
O $62000
O $362000
685000
2023
323000
2024
$137000
What amount will be debited to Construction-in-Process to record the change at the beginning of 2024?
205000

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