On January $1,$ Year $6,$ Roem Corp. changed its inventory method to FIFO from LIFO for both financial and income tax reporting purposes. The change resulted in a $$500,000$ increase in the January $1,$ Year$6,$ inventory. Assume that the income tax rate for all relevant years is $30\%.$ If Roem issues financial statements for Year$6$ only, the cumulative effect of the accounting change on all prior periods should be reported in the year$-$end

Retained earnings statement as a $$500,000$ addition to the beginning balance.

Income statement as a $$350,000$ cumulative effect of an accounting change.

Retained earnings statement as a $$350,000$ addition to the beginning balance.

Income statement as a $$500,000$ cumulative effect of an accounting change.