*P3.6 (LO 2, 3, 4, 6) (Statement Presentation) Presented below is a combined income and retained earnings statement for Sapporo Ltd. for 2025 (amounts in thousands).

Net sales ¥640,000 Costs and expenses Cost of goods sold ¥500,000 Selling, general, and administrative expenses 66,000 Other, net 17,000 583,000 Income before income tax 57,000 Income tax 19,400 Net income 37,600 Retained earnings at beginning of period, as previously reported 141,000 Adjustment required for correction of error (7,000)

Retained earnings at beginning of period, as restated 134,000 Dividends on ordinary shares (12,200)

Retained earnings at end of period ¥159,400 Additional facts are as follows.

1. “Selling, general, and administrative expenses” for 2025 included a charge of ¥8,500,000 for impairment of intangibles.

2. “Other, net” for 2025 was a loss on sale of equipment of ¥17,000,000.

3. “Adjustment required for correction of an error” was a result of a change in estimate (useful life of certain assets reduced to 8 years and a catch-up adjustment made).

4. Sapporo Company disclosed earnings per share for net income in the notes to the financial statements.

Instructions Determine from these additional facts whether the presentation of the facts in the Sapporo Ltd.
income and retained earnings statement is appropriate. If the presentation is not appropriate, describe the appropriate presentation and discuss its theoretical rationale. (Do not prepare a revised statement.)