Sharma Corporation has decided that, in preparing its 2020 financial statements under IFRS, two changes should be made from the methods used in prior years: 1. Depreciation. Sharma has used the tax basis (CCA) method of calculating depreciation for financial reporting purposes. During 2020, management decided that the straight-line method should have been used to calculate depreciation for financial reporting purposes for the years prior to 2020 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 2019 2019 2020 $1,450,000 105,850 104,300 $1,660,150 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 2020. 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, 2020 Assets Current assets Plant assets, at cost 2020 $28,340,000 $29,252,000 45,792,000 43,974,000 2019 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 Retained earnings 11,620,000 11,620,000 17,694,000 15,561,000 $65,592,000 $64,928,000 *Includes deferred tax asset of $225,000 (2020) and $234,000 (2019), with the latter amount being the result of deductible temporary differences that occurred before 2019. Net sales Cost of goods sold SHARMA CORPORATION Condensed Income Statement Year Ended December 31, 2020 2020 $80,520,000 $78,920,000 2019 54,847,000 53,074,000 25,673,000 25,846,000 Selling, general, and administrative expenses 19,540,000 18,411,000 Other expense, net Income before income tax Income tax Net income 6,133,000 7,435,000 1,198,000 1,079,000 4,935,000 6,356,000 $3,454,500 1,480,500 1,906,800 $4,449,200 The condensed statement of financial position as at December 31, 2018 included the following amounts (excluding the effects of the changes above): current assets $28,454,000; plant assets, at cost $42,568,000; accumulated depreciation $22,429,000; other long-term assets $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, 2020; however, no dividends were declared in 2018 or 2019. There have been no temporary differences between any book and tax items before 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 (2020 and 2019) financial statements of Sharma Corporation after adjustment for the two accounting changes. Show amounts for both 2020 and 2019, 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, 2019 December 31, 2020 + $ +A $ 2. Deferred tax asset/liability December 31, 2019 $ December 31, 2020 $ 3. Selling, general, and administrative expenses December 31, 2019 + $ December 31, 2020 $ 4. Current income tax expense December 31, 2019 December 31, 2020 5. Deferred tax expense $ CA +A $ December 31, 2019 $ December 31, 2020 CA $ Prepare the comparative financial statements that will be issued to shareholders for Sharma's year ended December 31, 2020. Assume that no dividends were declared in 2019. (Round answers to O decimal places, e.g. 5,275. 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 2020 2019 (Restated) Assets Current Assets Plant Assets Liabilities and Shareholders' Equity Current Liabilities Long-term Debt Share Capital Retained Earnings Total Liabilities and Shareholder's Equity < +A $ $ +A $ $ $ +A $ $ CA CA $ SHARMA CORPORATION Income Statement For the Years Ended December 31 2020 > > $ CA 2019 (Restated) > > CA $ SHARMA CORPORATION Statement of Changes in Equity For the Years Ended December 31, 2020 Share Capital Retained Earnings $ Balance, December 31, 2018, as previously reported Plus: Adjustment for the cumulative effect on prior periods of the error correction, net of tax Balance, January 1, 2019, as restated Net income 2019 (restated) Balance, December 31, 2019, as restated Net income 2020 Less: Dividends Balance, December 31, 2020 $ $ +A