Question

On December 31, 2018 Dean Company changed its method of accounting for inventory from weighted average cost method to the FIFO method. This change caused the 2018 beginning inventory to increase by $960,000. The cumulative effect of this accounting change to be reported for the year ended 12/31/18, assuming a 40% tax rate, is Group of answer choices

Answer 1

$576,000

Step-by-step explanation:

Calculation for what The cumulative effect of this accounting change to be reported for the year ended 12/31/18, assuming a 40% tax rate, is

Accounting change cumulative effect= ($960,000 × (1 - .40)

Accounting change cumulative effect= ($960,000×0.6)

Accounting change cumulative effect= $576,000

Therefore The cumulative effect of this accounting change to be reported for the year ended 12/31/18, assuming a 40% tax rate, is $576,000