In 1990, Brighton Co. changed from the individual item approach to the aggregate approach in applying the lower of FIFO cost or market to inventories. The cumulative effect of this change should be reported in Brighton's financial statements as a:

The change from an individual item approach to an aggregate approach for applying the lower of cost or market is a change in accounting principle. According to U.S. Generally Accepted Accounting Principles (GAAP), specifically FASB ASC 250, Accounting Changes and Error Corrections, such a change must be accounted for via retrospective application. This requires adjusting the financial statements of prior periods as if the new principle had always been in use. The cumulative effect of the change on periods prior to those presented is recorded as an adjustment to the beginning balance of retained earnings of the earliest period presented. The change and its impact must also be fully disclosed.

B. Reporting the effect as a component of income from continuing operations is the prospective treatment required for a change in accounting estimate, not a change in principle.
C. This is incorrect because the change is not reported in current income from continuing operations, and separate disclosure is mandatory for a material change in accounting principle.
D. This describes the "cumulative effect" method of reporting, which was prescribed by the now-superseded APB Opinion No. 20 and is no longer the appropriate treatment under current GAAP.

1. FASB Accounting Standards Codification (ASC) 250-10-45-5, Reporting a Change in Accounting Principle. This section states: "An entity shall report a change in accounting principle through retrospective application of the new accounting principle to all prior periods, unless it is impracticable to do so. Retrospective application... shall be reported as an adjustment to the opening balance of retained earnings..."

2. Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2022). Intermediate Accounting (18th ed.). Wiley. In Chapter 22, "Accounting Changes and Error Analysis," the text explains that under the retrospective approach, "The cumulative effect of the change for prior periods is recorded as an adjustment to beginning retained earnings of the earliest year presented." (Chapter 22, Section: Retrospective Accounting Change Approach).

3. Spiceland, J. D., Nelson, M. W., & Thomas, W. B. (2021). Intermediate Accounting (11th ed.). McGraw-Hill Education. Chapter 20, "Accounting Changes and Error Corrections," clarifies that most voluntary changes in accounting principles are reported retrospectively, which involves restating prior years' financial statements and adjusting the beginning balance of retained earnings.