Question: On December 3 1 , 2 0 2 5 , Carla Vista, Inc. appropriately changed its inventory valuation method to FIFO cost from average -

On December 31,2025, Carla Vista, Inc. appropriately changed its inventory valuation method to FIFO cost from average-cost for financial statement and income tax purposes. The change will result in a \(\$ 3850000\) increase in the beginning inventory at January 1,2025. Assume a 20\% income tax rate. The cumulative effect of this accounting change on beginning retained earnings is
\$3080000.
\(\$ 3850000\).
\$0.
\(\$ 770000\).
On December 3 1 , 2 0 2 5 , Carla Vista, Inc.

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