Choice "D" is correct. Financial statements of all prior periods presented should be restated when there is a "change in entity" such as resulting from:
Changing companies in consolidated financial statements.
Consolidated financial statements vs. Previous individual financial statements.
Choice "c" is incorrect. Cumulative-effect adjustments are reported in the retained earnings statement in the year of change.
Choice "a" is incorrect. Restatements are required for changes in entity (of subsidiaries).
Choice "b" is incorrect. Per GAAP, changes involving the cost and equity methods of accounting for investments are not considered to be changes in accounting principle. A change from the cost method to the equity method requires restatement; however, a change from the equity method to the cost method does not require restatement and is accounted for prospectively. Note: IFRS does not discuss the accounting for changes in reporting entity.
