Present the retained earnings reconciliation

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Reference no: EM133121989

Question - 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*

$(29,100)

$4,200

20X4

28,700

12,600

20X5

18,200

10,500

20X6

42,500

5,900

*First year of operations.

The company has a 31 December year-end. The tax rate is 20%. No dividends were declared until 20X7; $19,600 of dividends were declared and paid in December 20X7. Income for 20X7, calculated using the new accounting policy, was $103,200.

Required - Assuming that the change in policy was implemented retrospectively, present the retained earnings reconciliation that would appear in Hannam's 20X7 statements of changes in equity.

Reference no: EM133121989

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