Barden, Inc. operates a retail chain that specializes in baby clothes and accessories that are made to its specifications by a number of overseas manufacturers. Barden began operations in 1998 and has always employed the FIFO method to value its inventory. Since 1998, prices have generally declined as a result of intense competition among Barden’s suppliers. In 2007, however, prices began to rise significantly as these suppliers succumbed to international pressure and addressed sweatshop conditions in their factories. The improved working conditions and benefits led to increased costs that are being passed on to Barden. In turn, Barden’s management believes that FIFO no longer is the best method to value its inventories and thus switched to LIFO on January 1, 2008. This accounting change was justified because of LIFO’s better matching of current costs with current revenues. Barden judges it impractical to apply the LIFO method on a retrospective basis because the company never maintained records on a LIFO basis. As a result of this change, ending inventory was reported at \($275,000\) instead of its \($345,000\) FIFO value. Barden reported 2008 net income of $825,000; the company’s income tax rate is 35%. Barden has 10,000 shares of stock outstanding.

Required:

1. How should Barden’s 2008 comparative financial statements reflect this change in accounting principle?

2. Prepare whatever disclosure SFAS No. 154 requires as a result of this change.