Sun Construction Company Decided at the Beginning of 2012 to Change

Sun construction company decided at the beginning of 2012 to change from the cost-recovery method to the percentage-of-completion method for financial reporting purposes.The company will continue to use the cost-recovery method for tax purposes.For years prior to 2012, pretax income under the two methods was as follows: percentage-of-completion £120,000, and cost-recovery £80,000.The tax rate is 35%.sun's 2012 journal entry to record the change in accounting policy will include:

A) a debit to Retained Earnings for £40,000.
B) a credit to Construction in Process for £40,000.
C) a debit to Deferred Tax Asset for £14,000.
D) a credit to deferred Tax Liability for £14,000