What would be the proper adjustment to the december

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Question :

To achieve an appropriate recognition of revenues and expenses in its building construction division, the client proposes to switch from the completed-contract method of accounting to the percentage-of-completion method. Had the percentage-of- completion method been employed in all prior years, retained earnings at December 31, 2016, would have been $1,075,000 greater.

(a) For each of the changes described above, decide whether:

(1) The change involves an accounting principle, accounting estimate, or correction of an error.

(2) Restatement of opening retained earnings is required.

(b) What would be the proper adjustment to the December 31, 2016, retained earnings?

Reference no: EM132359634

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