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:
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:

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.

The condensed statement of financial position as at December 31, 2015 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, 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%.
Instructions
(a) 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.
1. Accumulated depreciation
2. Deferred tax asset/liability
3. Selling, general, and administrative expenses
4. Current income tax expense
5. Deferred tax expense
(b) Prepare the comparative financial statements that will be issued to shareholders for Sharma's year ended December 31, 2017.

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Excess of CCA-Based Depreciation over Straight-Line Depreciation Calculated for Financial Statement Purposes $1,365,000 Prior to 2016 2016 2017 106,050 103,950 $1,575,000 SHARMA CORPORATION Condensed Statement of Financial Position December 31, 2017 Assets Current assets Plant assets, at cost Less: Accumulated depreciation Other long-term assets* 2017 $28,340,000 45,792,000 (23,761,000) 15,221,000 $65,592,000 2016 $29,252,000 43,974,000 (22,946,000) 14,648,000 $64,928,000 Liabilities and Shareholders' Equity Current liabilities Long-term debt Share capital Retained earnings $21,124,000 15,154,000 11,620,000 17,694,000 $65,592,000 $23,650,000 14,097,000 11,620,000 15,561,000 $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 Cost of goods sold $80,520,000 $78,920,000 53,074,000 25,846,000 18,411,000 7,435,000 1,079,000 6,356,000 1,906,800 3,454,500 4,449,200 54,847,000 25,673,000 19,540,000 6,133,000 1,198,000 4,935,000 1,480,500 Selling, general, and administrative expenses Other expense, net Income before income tax Income tax Net income