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Question 32 of 32 View Policies

On January 1, 2021, Blossom Corp. changed its inventory method to FIFO from LIFO for both financial and income tax reporting purposes. The change resulted in a $1020000 increase in the January 1,2021 inventory. Assume that the income tax rate for all vears is 30\%. Assuming that comparative statements are not issued, the cumulative effect of the accounting change should be reparted by Blossom in its 2021 retained earnings statement as a $1020000 addition to the beginning balance. retained earnings statement as a $714000 addition to the beginning balance. income statement as a $714000 cumulative effect of accounting change. income statement as a $1020000 cumulative effect of accounting change