Question: On December 3 1 , 2 0 2 4 , Newsom, Inc. appropriately changed its inventory valuation method to FIFO cost from weighted - average

On December 31,2024, Newsom, Inc. appropriately changed its inventory valuation method to FIFO cost from weighted-average cost for financial statement and income tax purposes. The change will result in a $3,500,000 increase in the beginning inventory at January 1,2024. Assume a 20% income tax rate. The cumulative effect of this accounting change on beginning retained earnings is

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