Answered: Sandhill Inc., a real estate developing… | bartleby

Sandhill Inc., a real estate developing company, was accounting for its long-term contracts using the completed contract method prior to 2021. In 2021, it changed to the percentage-of-completion method. The company decided to use the same for income tax purposes. The tax rate enacted is 40%. Income before taxes under both the methods for the past three years appears below. 2019 2020 2021 Completed contract $490000 $324000 $158000 Percentage-of-completion 790000 407000 310000 What amount will be debited to Construction in Process account, to record the change at beginning of 2021?

SWFT Essntl Tax Individ/Bus Entities 2020

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter17: Business Tax Credits And The Alternative Minimum Tax

Section: Chapter Questions

Problem 1BCRQ

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Sandhill Inc., a real estate developing company, was accounting for its long-term contracts using the completed contract method prior to 2021. In 2021, it changed to the percentage-of-completion method.

The company decided to use the same for income tax purposes. The tax rate enacted is 40%. Income before taxes under both the methods for the past three years appears below.

		2019		2020		2021
Completed contract		$490000		$324000		$158000
Percentage-of-completion		790000		407000		310000

What amount will be debited to Construction in Process account, to record the change at beginning of 2021?

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Given that:

Method = Percentage of completion method

Tax rate = 40%

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