Question: At the beginning of 2017, Ivanhoe Construction Company changed from the completed-contract method to recognizing revenue over time (percentage-of-completion) for financial reporting purposes. The company will continue to use the completed-contract method for tax purposes. For years prior to 2017, pretax income under the two methods was as follows: percentage-of-completion $122,200, and completed-contract $85,800. The tax rate is 40%.
Required: Prepare Ivanhoe's 2017 journal entry to record the change in accounting principle.
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