On January 1, 2021, Stand Company changed to the percentage of completion method of income recognition for financial statement reporting but not for income tax reporting. Stand can justify this change in accounting policy. As of December 31, 2020, Stand compiled data showing that income under the completed contract method aggregated P700,000. If the percentage of completion method had been used, the accumulated income through December 31, 2020 would have been P880,000. Assuming an income tax rate of 35% for all years, the cumulative effect of this accounting change that should be reported by Stand in 2021 shall be?
On January 1, 2021, Stand Company changed to the percentage of completion method of income recognition for financial statement reporting but not for income tax reporting. Stand can justify this change in accounting policy. As of December 31, 2020, Stand compiled data showing that income under the completed contract method aggregated P700,000. If the percentage of completion method had been used, the accumulated income through December 31, 2020 would have been P880,000. Assuming an income tax rate of 35% for all years, the cumulative effect of this accounting change that should be reported by Stand in 2021 shall be?
Chapter17: Corporations: Introduction And Operating Rules
Section: Chapter Questions
Problem 16DQ
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Transcribed Image Text:On January 1, 2021, Stand Company changed to the percentage of completion
method of income recognition for financial statement reporting but not for
income tax reporting. Stand can justify this change in accounting policy.
As of December 31, 2020, Stand compiled data showing that income under the
completed contract method aggregated P700,000. If the percentage of
completion method had been used, the accumulated income through December
31, 2020 would have been P880,000.
Assuming an income tax rate of 35% for all years, the cumulative effect of
this accounting change that should be reported by Stand in 2021 shall be?
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