A4-13 Change in Accounting Policy:

Hannam Co. decided to change from the declining-balance method of depreciation to the straight-line method effective 1 January 20X7. The following information was provided:

Year	Net Income as Reported	Excess of Declining-Balance Depreciation over straight-Line Depreciation
20X3*	$(30,000)	$5,000
20X4	35,000	15,000
20X5	22,500	12,500
20X6	52,500	7,000

The company has a 31 December year-end. The tax rate is 20%. No dividends were declared until 20X7; $20,000 of dividends were declared and paid in December 20X7. Income for 20X7, calculated using the new accounting policy, was $105,000.

Required:

Assuming that the change in policy was implemented retrospectively, present the retained earnings reconciliation that would appear in Hannams 20X7 statement of changes in equity.