On January 1, year 2, Belmont Company changed its inventory cost flow method to the FIFO cost method from the LIFO cost method. Belmont can justify the change, which was made for both financial statement and income tax reporting purposes. Belmont’s inventories aggregated $4,000,000 on the LIFO basis at December 31, year 1. Supplementary records maintained by Belmont showed that the inventories would have totaled $4,800,000 at December 31, year 1, on the FIFO basis. Belmont does not have sufficient information to calculate the effect of the change in inventories for years prior to year 1. Ignoring income taxes, the adjustment for the effect of changing to the FIFO method from the LIFO method should be reported by Belmont
　　A. In the year 2 income statement as an $800,000 loss from cumulative effect of change in accounting principle.
　　B. In the year 1 retained earnings statement as an $800,000 debit adjustment to the beginning balance.
　　C. As an adjustment to the balances of inventory, and a retrospetive application to cost of goods sold, net income, and retained earnings in the year 1 comparative financial statements.
　　D. In the year 2 retained earnings statement as an $800,000 credit adjustment to the beginning balance.\
　　Answer:C
　　C is corrent. Per ASC Topic 250, retrospective application requires the changes to be reflected in the carrying amounts of assets and liabilities of the first period presented. The financial statements for each individual prior period are adjusted to reflect the period-specific effects of applying the new accounting principle if it can be determined.
　　A is incorrect. Per ASC Topic 250, effects of a change in accounting principle are no longer shown as a cumulative effect on the income statement.
　　B is incorrect.   Per ASC Topic 250, retrospective application requires the changes to be reflected in the carrying amounts of assets and liabilities of the first period presented. The financial statements for each individual prior period are adjusted to reflect the period-specific effects of applying the new accounting principle if it can be determined.
　　D is incorrect.   Per ASC Topic 250, retrospective application requires the changes to be reflected in the carrying amounts of assets and liabilities of the first period presented. The financial statements for each individual prior period are adjusted to reflect the period-specific effects of applying the new accounting principle if it can be determined.