Question: On December 31, 20X1, Leamington Company appropriately changed its inventory valuation method to FIFO cost from LIFO cost for both financial statement and income tax

On December 31, 20X1, Leamington Company appropriately changed its inventory valuation method to FIFO cost from LIFO cost for both financial statement and income tax purposes. The change results in a $140,000 increase in the beginning inventory at January 1, 20X1. Assume a 30% income tax rate. Also assume that Leamington provides only 20X1 financial statements. What cumulative effect of this accounting change should be reported in beginning retained earnings for the year 20X1?

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