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.