Hampton's Construction,Inc

question 293

Multiple Choice

Hampton's Construction,Inc.decided to change from completed-contract method of accounting to percentage-of-completion method.Hampton will continue to us the completed-contract method for income tax purposes.The following information is available for net income.The income tax rate for all years is 35%. What is the journal entry to record the change in accounting principle on January 1,2016?

• A)No journal entry need for prospective application of the change in principle.
• C) Construction in Progress 72,000
• D) Retained Earnings-Prior Period Adj. 33,150

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Definitions:

Opportunity Cost

The expense incurred by not choosing the second-best option available while deciding.

Cash Outlay

The actual amount of money spent or required to be spent on a particular expense, project, or acquisition.

Alternative Investments

Investment assets that do not fall into conventional categories such as stocks, bonds, or cash, including real estate, hedge funds, or commodities.

Differential Revenue

The difference in revenue between two alternatives, often used in decision making to understand the financial impact of different choices.