During 2015, a Construction Company Changed from the Completed-Contract Method

question 65

Multiple Choice

During 2015, a construction company changed from the completed-contract method to the percentage-of-completion method for accounting purposes but not for tax purposes. Gross profit figures under both methods for the past three years appear below: Assuming an income tax rate of 40% for all years, the affect of this accounting change on prior periods should be reported by a credit of

• A) $660,000 on the 2015 income statement.
• B) $450,000 on the 2015 income statement.
• C) $660,000 on the 2015 retained earnings statement.
• D) $450,000 on the 2015 retained earnings statement.

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Definitions:

Short-Term Memory

Short-term memory refers to the capacity to hold a small amount of information in mind in an active, readily available state for a short period.

Frontal Lobes

Regions at the front of the brain's cerebral cortex, involved in executive functions such as decision-making, problem-solving, and controlling behavior.

Temporal Lobes

Areas of the brain located on either side of the head, involved in processing sensory input and assigning it emotional meaning, along with language comprehension.

Episodic Autobiographical Amnesias

Episodic autobiographical amnesias refer to the inability to recall personal events from one’s life, affecting the episodic aspect of autobiographical memory.