On January 1, Year 1, the Dole Company purchased an asset that cost $154,000. The asset had an expected useful life of seven years and no estimated residual value. The company initially decided to use sum-of-the-years'-digits (SYD) depreciation for both financial accounting and income tax purposes. Depreciation expense for the straight-line method and the sum-of-the-years'-digits method is as follows:

Year	Straight-line over 7 Years	SYD over 7 Years	Difference
1	$22,000	$38,500	$16,500
2	22,000	33,000	11,000
3	22,000	27,500	5,500
4	22,000	22,000	0
5	22,000	16,500	(5,500)
6	22,000	11,000	(11,000)
7	22,000	5,500	(16,500)
	$154,000	$154,000	$0

At the beginning of Year 4, Dole changed from the sum-of-the-years'-digits method to the straight-line method of depreciation for financial reporting purposes. The company's income tax rate is 30%. In Year 3 and Year 4, Dole had $90,000 pretax income before depreciation and income taxes.

Required:

a.	Complete the following section of the income statement.
b.	Prepare the journal entries to record the depreciation expense, tax expense, and the effect of the accounting change (if any) in Year 4.

-of-the-years'-digits method to the straight-line method of depreciation for financial reporting purposes. The company's income tax rate is 30%. In Year 3 and Year 4, Dole had $90,000 pretax income before depreciation and income taxes.

a. Complete the following section of the income statement:

Income Statement Instructions

	Year 3	Year 4
Pretax income before depreciation	$90,000	$90,000
Depreciation expense
Income before income taxes
Income tax expense
Net income

b. Prepare the journal entries to reflect the changes on January 1.

General Journal Instructions

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