Q.32

On January 1, 2021, Ivanhoe Corp. changed its inventory method to FIFO from LIFO for both financial and income tax reporting purposes. The change resulted in a $1050000 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 Ivanhoe in its 2021 retained earnings statement as a $735000 addition to the beginning balance. income statement as a $1050000 cumulative effect of accounting change. retained earnings statement as a $1050000 addition to the beginning balance. income statement as a $735000 cumulative effect of accounting change