INTERMEDIATE ACCOUNTING-MYLAB W/ETEXT
3rd Edition
ISBN: 9780136946601
Author: GORDON
Publisher: PEARSON
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Textbook Question
Chapter 21, Problem 21.5BE
Change in Accounting Principle, Long-Term Construction Contracts. Cole Construction Company elected to change its method of accounting from the completed-contract method to the percentage-of- completion method. Prior-years income (cumulative) would have been $550,000 higher if Cole had always used the percentage-of-completion method. The company is subject to a 35% tax rate Prepare the
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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
Skysong IT Consulting changed from the recognition overtime (percentage-of-completion) to the completed-contract method for financial reporting purposes. The company will continue to use the completed-contract method for tax purposes. For years prior to 2017, pretax income under the two methods was as follows: percentage-of-completion $214,000, and completed-contract $156,000. The tax rate is 30%. Prepare Skysong IT’s 2017 journal entry to record the change in accounting principle.
Vignette 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?
Chapter 21 Solutions
INTERMEDIATE ACCOUNTING-MYLAB W/ETEXT
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 - Error Analysis and Correction. Feinstein and...Ch. 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. 1FSCCh. 21 - Surfing the Standards: Change in Accounting...Ch. 21 - Prob. 1BCC
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