P$4\mathrm{.}4$ Wavecrest Inc. reported income from continuing operations before tax of $$1,790,000$ during $2023.$ Additional transactions occurring in

$2023$ but not included in the $$1,790,$ ooo were as follows:

The corporation experienced an insured flood loss of $$80,000$ during the year.

At the beginning of $2021,$ the corporation purchased a machine for $$54,000($residual value of $$9,000)$ that has a useful life of six years. The

bookkeeper used straight$-$line depreciation for $2021,2022,$ and $2023,$ but failed to deduct the residual value in calculating the depreciable

amount.

The sale of FV$-$NI investments resulted in a loss of $$107,000.$

When its president died, the corporation gained $$100,000$ from an insurance policy. The cash surrender value of this policy had been carried

on the books as an investment in the amount of $$46,000.($The gain is non$-$taxable.$)$

The corporation disposed of its recreational division at a loss of $$115,000$ before tax. Assume that this transaction meets the criteria for

accounting treatment as discontinued operations.

The corporation decided to change its method of inventory pricing from average cost to the FIFO method. The effect of this change on prior

years is to increase $2021$ income by $$60,000$ and decrease $2022$ income by $$20,000$ before taxes. The FIFO method has been used for $2023.$

Instructions

a$.$ Prepare an income statement for the year $2023,$ starting with income from continuing operations before income tax. Calculate earnings per

share as required under IFRS. There were $80,000$ common shares outstanding during the year. $($Assume a tax rate of $30\%$ on all items,

unless they are noted as being non$-$taxable.$)$

b$.$ Assume that beginning retained earnings for $2023$ is $$2,540,000$ and that dividends of $$175,000$ were declared during the year. Prepare the

retained earnings portion of the statement of changes in equity for $2023.$