During 2010, Orca Corp. decided to change from the FIFO method of inventory valuation to the weighted-average method. Inventory balances under each method were as follows: FIFO Weighted-average January 1, 2010 71,000 77,000 December 31, 2010 79,000 83,000 Orca’s income tax rate is 30%. In its 2010 financial statements, what amount should Orca report as the cumulative effect of this accounting change? a.2,800 b.4,000 c.4,200 d.6,000

Intermediate Accounting: Reporting And Analysis
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Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
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Chapter7: Inventories: Cost Measurement And Flow Assumptions
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During 2010, Orca Corp. decided to change from the FIFO method of inventory valuation to the weighted-average method. Inventory balances under each method were as follows:
FIFO Weighted-average
January 1, 2010 71,000 77,000
December 31, 2010 79,000 83,000
Orca’s income tax rate is 30%.

In its 2010 financial statements, what amount should Orca report as the cumulative effect of this accounting change?
a.2,800
b.4,000
c.4,200
d.6,000

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