At January 1, 2023, Baker Corp. reported retained earnings of $2 million. In 2023, Baker discovered that 2022 depreciation expense was understated in error by $500,000. In 2023, net income was $800,000 and dividends declared were $195,000. The tax rate is 25%. Baker follows ASPE and the future taxes method of accounting for income taxes.

(a) Prepare a 2023 statement of retained earnings for Baker.

(b) Briefly explain how your answer would change if Baker followed IFRS.