The Long Island Lightening Co. has used the completed contract method of accounting for construction...
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Accounting
- The Long Island Lightening Co. has used the completed contract method of accounting for construction contracts. At the beginning of 2019, the company decides to switch to the percentage of completion method for financial reporting purposes but will continue to use the completed contract method for income tax purposes. The following table presents information concerning the change. The income tax rate for all years is 40%.
Income before Income Taxes
Years Percentage of Completed Contract
Completion Method Method
2018 980 million 730 million
2019 900 million 480 million
Required: (1) Prepare the journal entry to record this change and (2) Determine the net incomes to be reported on the 2019 comparative income statement.
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