On January 1, 2021, Crane Corp. changed its inventory method to FIFO from LIFO for both financial and income tax reporting purposes. The change resulted in a $1140000 increase in the January 1, 2021 inventory. Assume that the income tax rate for all years is 30%. Assuming that comparative statements are not issued, the cumulative effect of the accounting change should be reported by Crane in its 2021

retained earnings statement as a $798000 addition to the beginning balance.

income statement as a $798000 cumulative effect of accounting change.

retained earnings statement as a $1140000 addition to the beginning balance.

income statement as a $1140000 cumulative effect of accounting change.