Accounting

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On January 1, 2013, Playtime Corporation changed its inventory method to FIFO from LIFO for both financial and income tax reporting purposes.  The change resulted in a $900,000 increase in the January 1, 2013 inventory.  Assume that the income tax rate for all years is 30%.  The cumulative effect of the accounting change should be reported by Playtime in its 2013

 

retained earnings statement as a $630,000 addition to the beginning balance.
income statement as a $630,000 cumulative effect of accounting change.
retained earnings statement as a $630,000 addition to the beginning balance.
income statement as a $630,000 cumulative effect of accounting change.
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