On December 31 . 2014, Artistown Company appropriately changed to the FIFO cost method from the weighted-average cost method for financial statement and income tax purposes. The change will result in a $700,000 increase in the beginning inventory at January 1 . 2014 . Assuming a 40 percent income tax rate and that no comparative financial statements for prior years are reported, the cumulative
effect of this accounting change reported for the year ended December 31 . 2014, is
a. $700,000.
b. $350,000.
c. $420,000.
d. $280,000.
C
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