Intermediate Accounting - Myaccountinglab - Pearson Etext Access Card Student Value Edition
1st Edition
ISBN: 9780134047430
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Chapter 21, Problem 21.4BE
To determine
To prepare: The
Given information:
Tax rate is 35%.
Cumulative income would have been lower by $300,000 if completed contract method was used.
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Carrboro Construction Company elected to change its method of accounting from the
percentage-of-completion method to the completed-contract method. Prior-years income
(cumulative) would have been $310,000 lower if Carrboro had always used the completed contract
method. The company is subject to a 35% tax rate. Prepare the journal entry to record the change
in method. (Record debits first, then credits. Exclude explanations from any journal entries.)
Account
Current Year
I need the answer as soon as possible
If at the end of the second year of a 4-year contract, a company determines total estimated costs are going to exceed the contract price,
it immediately recognizes the total estimated loss.
it recognizes the total estimated loss in the year of completion if it is using the point-in-time method.
it spreads the estimated loss over the remaining two years if it is using the recognizing-revenue-over-time method.
it treats the estimated loss as a change in accounting estimate.
Chapter 21 Solutions
Intermediate Accounting - Myaccountinglab - Pearson Etext Access Card Student Value Edition
Ch. 21 - Are accounting changes permitted in financial...Ch. 21 - How do firms report accounting changes under the...Ch. 21 - Prob. 21.3QCh. 21 - How do firms account for changes in accounting...Ch. 21 - Prob. 21.5QCh. 21 - Prob. 21.6QCh. 21 - Prob. 21.7QCh. 21 - Prob. 21.8QCh. 21 - Do accounting errors that self-correct within two...Ch. 21 - Does a firm need to correct an error that...
Ch. 21 - Prob. 21.1MCCh. 21 - Prob. 21.2MCCh. 21 - Prob. 21.3MCCh. 21 - Prob. 21.4MCCh. 21 - Prob. 21.5MCCh. 21 - Prob. 21.1BECh. 21 - Prob. 21.2BECh. 21 - Prob. 21.3BECh. 21 - Prob. 21.4BECh. 21 - Change in Accounting Principle, Long-Term...Ch. 21 - Prob. 21.6BECh. 21 - Prob. 21.7BECh. 21 - Prob. 21.8BECh. 21 - Prob. 21.9BECh. 21 - Prob. 21.10BECh. 21 - Prob. 21.11BECh. 21 - Prob. 21.12BECh. 21 - Prob. 21.13BECh. 21 - Prob. 21.14BECh. 21 - Prob. 21.1ECh. 21 - Prob. 21.2ECh. 21 - Prob. 21.3ECh. 21 - Prob. 21.4ECh. 21 - Prob. 21.5ECh. 21 - Prob. 21.6ECh. 21 - Prob. 21.7ECh. 21 - Prob. 21.8ECh. 21 - Prob. 21.9ECh. 21 - Prob. 21.10ECh. 21 - Prob. 21.1PCh. 21 - Prob. 21.2PCh. 21 - Prob. 21.3PCh. 21 - Prob. 21.4PCh. 21 - Prob. 21.5PCh. 21 - Prob. 21.6PCh. 21 - Prob. 21.7PCh. 21 - Cases Judgment Case Judgment Case: Materiality and...Ch. 21 - Prob. 1FSACCh. 21 - Surfing the Standards: Change in Accounting...Ch. 21 - Prob. 1BCC
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- Accounting for Special Transactionsarrow_forwardPharoah Construction Company uses the percentage-of-completion method of accounting. In 2025, Pharoah began work under a contract with a contract price of $1,650,000. Other details follow: Costs incurred during the year Estimated costs to complete, as of December 31 Billings during the year Collections during the year (a) Your answer is incorrect. 2025 $1,093,400 446,600 933,400 260,000 2026 $1,510,000 -0- 1,650,000 1,650,000 What portion of the total contract price would be recognized as revenue in 2025? In 2026?arrow_forwardNote:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forward
- Ivanhoe Construction Company uses the percentage-of-completion method of accounting. In 2023, Ivanhoe began work under a non- cancellable contract #E2-D2, which provided for a contract price of $2,237,000. Other details follow: Costs incurred during the year Estimated costs to complete, as at December 31 Billings during the year (non-refundable) Collections during the year 2023 $616,740 1,006,260 414,000 352,000 2024 $1,441,000 1,344,000 1,508,000arrow_forwardVignette Construction Company changed from completed contract method to the percentage of completion method of accounting for long-term construction contracts during 2021. For tax purposes, the company employs the completed contract method and will continue this approach in the future. The appropriate information related to this change is as follows: Pre-tax Income from 2020 2021 Percentage of Completion 2,028,000 1,820,000 Completed Contract 1,534,000 1,248,000 Income tax rate is 35%. What is the amount of net income after tax that Vignette Company should report for the year 2021?arrow_forwardsarrow_forward
- Do not give answer in imagearrow_forwardBlossom Construction Company uses the percentage-of-completion method of accounting. In 2021, Blossom began work on a contract it had received which provided for a contract price of $47500000. Other details follow: 2021 Costs incurred during the year $22000000 Estimated costs to complete as of December 31 16000000 Billings during the year 21500000 Collections during the year 10500000 What should be the gross profit recognized in 2021?arrow_forward9) Matador began doing business on January 1, 2018, using the Percentage of Completion to record construction revenues. During 2022, Matador changed to the Completed Contract Method to record construction revenues to be consistent with industry practice. The bookkeeper used the Completed Contract Method for recording construction revenues in 2022. Determine the adjustment to ICO. Matador has a corporate tax rate of 30%. The company compiled the following comparative data. 2018 2019 2020 2021 2022 Percentage of Completion Method $ 600,000 $545,500 $ 537,500 $512,500 $685,000 Completed Contract Method $387,500 $322,500 $385,000 $395,000 $415,000 10) Using the information in Question 9, determine the cumulative effect adjustment to Retained Earnings that Matador will recognize in the journal entry to record this accounting change. Matador has a corporate tax rate of 30%. 11) Matador reports 3 years of comparative financial statements (2022, 2021, and 2020). Using the information in…arrow_forward
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