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| On December 31, year 2, Rapp Co. changed inventory cost methods to FIFO from LIFO for financial statement and income tax purposes. The change will result in a $175,000 increase in the beginning inventory at January 1, year 3. Rapp does not maintain records to identify the effect of the change on years prior to year 1. Assuming a 30% income tax rate, the cumulative effect of this accounting change reported in the income statement for the year ended December 31, year 3, is A. $0 B. $122,500 C. $ 52,500 D. $175,000 |