Sharma Corporation has decided that, in preparing its 2017 financial statements under IFRS, two changes should be made from the methods used in prior years: oss of Cont-line statemen370,000 1. Depreciation. Sharma has used the tax basis (CCA) method of calculating depreciation for financial reporting purposes. During 2017, management decided that the straight-line method should have been used to calculate depreciation for financial reporting purposes for the years prior to 2017 and going forward. The following schedule identifies the excess of depreciation based on CCA over depreciation based on straight-line, for the past years and for the current year: Excess of CCA-based Depreciation over Straight-Line Depreciation Calculated for Financial Statement Purposes Prior to 2016 2016 106,400 2017 104,500 $1,580,900 Depreciation is charged 75% to cost of sales and 25% to selling, general, and administrative expenses. 2. Bad debt expense. In the past, Sharma recognized bad debt expense equal to 1.5% of net sales. After careful review, it has been decided that a rate of 1.75% is more appropriate for 2017. Bad debt expense is charged to selling, general, and administrative expenses. The following information is taken from preliminary financial statements, which were prepared before including the effects of the two changes. SHARMA CORPORATION Condensed Statement of Financial Position December 31, 2017 Assets 2017 2016 Current assets $28,340,000 $29,252,000 Plant assets, at cost 45,792,000 43,974,000 Less: Accumulated depreciation (23,761,000) (22,946,000) Other long-term assets* 15,221,000 14,648,000 $65,592,000 $64,928,000 Liabilities and Shareholders' Equity Current liabilities $21,124,000 $23,650,000 Long-term debt 15,154,000 14,097,000 Share capital 11,620,000 11,620,000 Retained earnings 17,694,000 15,561,000 $65,592,000 $64,928,000 *Includes deferred tax asset of $225,000 (2017) and $234,000 (2016), with the latter amount being the result of deductible temporary differences that occurred before 2016. SHARMA CORPORATION Condensed Income Statement Year Ended December 31, 2017 2017 2016 Net sales $80,520,000 $78,920,000 Cost of goods sold 54,847,000 53,074,000 25,673,000 25,846,000 Selling, general, and administrative expenses 19,540,000 18,411,000 6,133,000 7,435,000 Other expense, net (1,198,000) (1,079,000) Income before income tax 4,935,000 6,356,000 Income tax 1,480,500 1,906,800 Net income $ 3,454,500 $ 4,449,200 The condensed statement of financial position as at December 31, 2015 included the following amounts (excluding the effects of the changes ): current assets $28,454,000; plant assets, at cost $42,568,000; accumulated depreciation $22,429,000; other long-te $14,282,000; current liabilities $26,603, 200; long-term debt $13,540,000; share capital $11,620,000; and retained earnings $11,111,800. Dividends of $1,321,500 were declared on December 31, 2017; however, no dividends were declared in 2015 or 2016. There have been no temporary differences between any book and tax items prior to the above changes except for those that involve the allowance for doubtful accounts. For tax purposes, bad debts are deductible only when they are written off. The tax rate is 30%. For each of the items that follow, calculate the amounts that would appear on the comparative (2017 and 2016) financial statements of Sharma Corporation after adjustment for the two accounting changes. Show amounts for both 2017 and 2016, and prepare supporting schedules as necessary. (Round answers to o decimal places, e.g. 5,275. Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).) 1. Accumulated depreciation December 31, 2016 21,469,600 December 31, 2017 22,180,100 2. Deferred tax asset/liability December 31, 2016 442,920 December 31, 2017 -96,800 3. Selling, general, and administrative expenses December 31, 2016 18,384,400 December 31, 2017 19,715,175 4. Current income tax expense December 31, 2016 1,938,600 December 31, 2017 $ 1,451,355 5. Deferred tax expense December 31, 2016 ($31,800) December 31, 2017 29.145 Prepare the comparative financial statements that will be issued to shareholders for Sharma's year ended December 31, 2017. Assume that no dividends were declared in 2016. (Do not leave any answer field blank. Enter o for amounts. Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).) SHARMA CORPORATION Condensed Statement of Financial Position As at December 31 2017 2016 (Restated) January 1, 2016 (Restated) Assets Current Assets 28,138,700 29,252,000 28,454,000 lant Assets | 45,792,000 43,974,000 T 42,568,000 Accumulated Depreciation 1-22,180,100 1-21,469,600 T-20,974,000 Other Long-term Assets 14,996,000 14,648,000 14,282,000 Total Assets 66,971,600 66,404,400 64,330,000 Liabilities and Shareholders' Equity Current Liabilities 21,124,000 J 23,650,000 26,603,200 Long-term Debt 15,154,000 14,097,000 13,540,000 T Share Capital 11,620,000 T 11,620,000 | 11,620,000 Retained Earnings 18,718,694 16,653,700 12,130,300 Total Liabilities and Shareholder's Equity 66,616,694 66,020,700 63,893,500 SHARMA CORPORATION Income Statement For the Years Ended December 31 2017 2016 (Restated) 78,920,000 Net Sales J 80,520,000 T Cost of Goods Sold |-54,768,888 -52,994,500 25,751,112 25,925,500 Selling, General and Administrative Expenses : || -19,715,175 -18,384,400 155,004,063 150, 298,900 Other Income / (Expense) -1,198,000 -1,079,000 Income Before Income Tax 156,202,063 151,377,900 T Income Tax Current xx Income Tax Deferred ||46,860,619 45,413,370 Income Tax Deferred | 46,860,619 45,413,370 Net Income / (Loss) 109,341,444 105,964,530 SHARMA CORPORATION Statement of Changes in Equity For the Years Ended December 31 Share Capital Retained Earnings Total sl 11,620,000 11,111,800 ST 22,731,800 Balance, December 31, 2015, as previously reported Plus: Adjustment for the cumulative effect on prior periods of the error correction, net of tax 1,018,500 1,018,500 Balance, January 1, 2016, as restated 11,620,000 12,130,300 23,750,300 Net income 2016 (restated) 4,523,400 4,523,400 Balance, December 31, 2016, as restated 11,620,000 16,653,700 28,273,700 Net income 2017 3,386,494 3,386,494 Less: Dividends 1,321,500 1,321,500 Balance, December 31, 2017 11,620,000 18,718,694 30,338,694 Sharma Corporation has decided that, in preparing its 2017 financial statements under IFRS, two changes should be made from the methods used in prior years: oss of Cont-line statemen370,000 1. Depreciation. Sharma has used the tax basis (CCA) method of calculating depreciation for financial reporting purposes. During 2017, management decided that the straight-line method should have been used to calculate depreciation for financial reporting purposes for the years prior to 2017 and going forward. The following schedule identifies the excess of depreciation based on CCA over depreciation based on straight-line, for the past years and for the current year: Excess of CCA-based Depreciation over Straight-Line Depreciation Calculated for Financial Statement Purposes Prior to 2016 2016 106,400 2017 104,500 $1,580,900 Depreciation is charged 75% to cost of sales and 25% to selling, general, and administrative expenses. 2. Bad debt expense. In the past, Sharma recognized bad debt expense equal to 1.5% of net sales. After careful review, it has been decided that a rate of 1.75% is more appropriate for 2017. Bad debt expense is charged to selling, general, and administrative expenses. The following information is taken from preliminary financial statements, which were prepared before including the effects of the two changes. SHARMA CORPORATION Condensed Statement of Financial Position December 31, 2017 Assets 2017 2016 Current assets $28,340,000 $29,252,000 Plant assets, at cost 45,792,000 43,974,000 Less: Accumulated depreciation (23,761,000) (22,946,000) Other long-term assets* 15,221,000 14,648,000 $65,592,000 $64,928,000 Liabilities and Shareholders' Equity Current liabilities $21,124,000 $23,650,000 Long-term debt 15,154,000 14,097,000 Share capital 11,620,000 11,620,000 Retained earnings 17,694,000 15,561,000 $65,592,000 $64,928,000 *Includes deferred tax asset of $225,000 (2017) and $234,000 (2016), with the latter amount being the result of deductible temporary differences that occurred before 2016. SHARMA CORPORATION Condensed Income Statement Year Ended December 31, 2017 2017 2016 Net sales $80,520,000 $78,920,000 Cost of goods sold 54,847,000 53,074,000 25,673,000 25,846,000 Selling, general, and administrative expenses 19,540,000 18,411,000 6,133,000 7,435,000 Other expense, net (1,198,000) (1,079,000) Income before income tax 4,935,000 6,356,000 Income tax 1,480,500 1,906,800 Net income $ 3,454,500 $ 4,449,200 The condensed statement of financial position as at December 31, 2015 included the following amounts (excluding the effects of the changes ): current assets $28,454,000; plant assets, at cost $42,568,000; accumulated depreciation $22,429,000; other long-te $14,282,000; current liabilities $26,603, 200; long-term debt $13,540,000; share capital $11,620,000; and retained earnings $11,111,800. Dividends of $1,321,500 were declared on December 31, 2017; however, no dividends were declared in 2015 or 2016. There have been no temporary differences between any book and tax items prior to the above changes except for those that involve the allowance for doubtful accounts. For tax purposes, bad debts are deductible only when they are written off. The tax rate is 30%. For each of the items that follow, calculate the amounts that would appear on the comparative (2017 and 2016) financial statements of Sharma Corporation after adjustment for the two accounting changes. Show amounts for both 2017 and 2016, and prepare supporting schedules as necessary. (Round answers to o decimal places, e.g. 5,275. Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).) 1. Accumulated depreciation December 31, 2016 21,469,600 December 31, 2017 22,180,100 2. Deferred tax asset/liability December 31, 2016 442,920 December 31, 2017 -96,800 3. Selling, general, and administrative expenses December 31, 2016 18,384,400 December 31, 2017 19,715,175 4. Current income tax expense December 31, 2016 1,938,600 December 31, 2017 $ 1,451,355 5. Deferred tax expense December 31, 2016 ($31,800) December 31, 2017 29.145 Prepare the comparative financial statements that will be issued to shareholders for Sharma's year ended December 31, 2017. Assume that no dividends were declared in 2016. (Do not leave any answer field blank. Enter o for amounts. Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).) SHARMA CORPORATION Condensed Statement of Financial Position As at December 31 2017 2016 (Restated) January 1, 2016 (Restated) Assets Current Assets 28,138,700 29,252,000 28,454,000 lant Assets | 45,792,000 43,974,000 T 42,568,000 Accumulated Depreciation 1-22,180,100 1-21,469,600 T-20,974,000 Other Long-term Assets 14,996,000 14,648,000 14,282,000 Total Assets 66,971,600 66,404,400 64,330,000 Liabilities and Shareholders' Equity Current Liabilities 21,124,000 J 23,650,000 26,603,200 Long-term Debt 15,154,000 14,097,000 13,540,000 T Share Capital 11,620,000 T 11,620,000 | 11,620,000 Retained Earnings 18,718,694 16,653,700 12,130,300 Total Liabilities and Shareholder's Equity 66,616,694 66,020,700 63,893,500 SHARMA CORPORATION Income Statement For the Years Ended December 31 2017 2016 (Restated) 78,920,000 Net Sales J 80,520,000 T Cost of Goods Sold |-54,768,888 -52,994,500 25,751,112 25,925,500 Selling, General and Administrative Expenses : || -19,715,175 -18,384,400 155,004,063 150, 298,900 Other Income / (Expense) -1,198,000 -1,079,000 Income Before Income Tax 156,202,063 151,377,900 T Income Tax Current xx Income Tax Deferred ||46,860,619 45,413,370 Income Tax Deferred | 46,860,619 45,413,370 Net Income / (Loss) 109,341,444 105,964,530 SHARMA CORPORATION Statement of Changes in Equity For the Years Ended December 31 Share Capital Retained Earnings Total sl 11,620,000 11,111,800 ST 22,731,800 Balance, December 31, 2015, as previously reported Plus: Adjustment for the cumulative effect on prior periods of the error correction, net of tax 1,018,500 1,018,500 Balance, January 1, 2016, as restated 11,620,000 12,130,300 23,750,300 Net income 2016 (restated) 4,523,400 4,523,400 Balance, December 31, 2016, as restated 11,620,000 16,653,700 28,273,700 Net income 2017 3,386,494 3,386,494 Less: Dividends 1,321,500 1,321,500 Balance, December 31, 2017 11,620,000 18,718,694 30,338,694