During 2019, PTS Company changed from the cost recovery method to the percentage of completion method. The tax rateis 30%.The entity revealed the following gross income under the cost recovery and percentage of completion method:2017 20182019Cost recovery methodPercentage of completion 1,600,000 1,900,000 2,100,000P950,000 P1,250,000 P1,400,000How much is the increase in retained earnings brought about by this accounting change be reported in 2019?A) P390,000B) P910,000(c) P2,200,000(D) P1,300,000

Solution: As per GAAP, change in accounting principal should be accounted for retrospectively…

During 2019, PTS Company changed from the cost recovery method to the percentage of completion method. The tax rate is 30%. The entity revealed the following gross income under the cost recovery and percentage of completion method: 2017 2018 2019 Cost recovery method P950,000 P1,250,000 P1,400,000 Percentage of completion 1,600,000 1,900,000 2,100,000 How much is the increase in retained earnings brought about by this accounting change be reported in 2019?

During 2019, PTS Company changed from the cost recovery method to the percentage of completion method. The tax rate is 30%. The entity revealed the following gross income under the cost recovery and percentage of completion method: 2017 2018 2019 Cost recovery method P950,000 P1,250,000 P1,400,000 Percentage of completion 1,600,000 1,900,000 2,100,000 How much is the increase in retained earnings brought about by this accounting change be reported in 2019?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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