A Company Changes from Percentage-Of-Completion to Cost-Recovery, Which Is the Method

question 45

Multiple Choice

A company changes from percentage-of-completion to cost-recovery, which is the method used for tax purposes.The entry to record this change should include a

• A)debit to Construction in Process.
• B)debit to Loss on Long-term Contracts in the amount of the difference on prior years, net of tax.
• C)debit to Retained Earnings in the amount of the difference on prior years, net of tax.
• D)credit to Deferred Tax Liability.

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Definitions:

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Fundamental beliefs and principles that individuals hold, guiding their behavior and influencing decisions and actions in their lives.

Professional Values

The principles and standards that guide the behavior and decision-making processes of individuals within their professional roles.

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Plans of action or policies designed to achieve a major or overall aim.

Ethical Dilemmas

Situations in which a difficult choice must be made between two options, neither of which resolves the issue in an ethically satisfactory manner.