The Lawrence Company Began Its Operations on January 1, 2010

Multiple Choice

The Lawrence Company began its operations on January 1, 2010, and used the LIFO method of accounting for its inventory.On January 1, 2012, Lawrence Company adopted FIFO in accounting for its inventory.The following information is available regarding cost of goods sold for each method: $\begin{array}{rrr}& \text {LIFO Cost of}& \text {FIFO Cost of}\\\text { Year }& \text {Goods Sold}& \text {Goods Sold}\\2010 & \$ 470,000 & \$ 350,000 \\2011 & 690,000 & 450,000 \\2012 & 700,000 & 540,000\end{array}$

Assuming a tax rate of 30% and the same accounting change adopted for tax purposes, how would the effect of the accounting change be reported in opening retained earnings on the 2012 financial statements?

A) +$360, 000 restatement
B) +$252, 000 restatement
C) no restatement
D) ($700, 000) restatement