On December 31, 2015, Grantham, Inc

Multiple Choice

On December 31, 2015, Grantham, Inc. appropriately changed its inventory valuation method to FIFO cost from weighted-average cost for financial statement and income tax purposes. The change will result in a $2,500,000 increase in the beginning inventory at January 1, 2015. Assume a 30% income tax rate. The cumulative effect of this accounting change on beginning retained earnings is

A) $0.
B) $750,000.
C) $1,750,000.
D) $2,500,000.