A company presents its accounts for inventory on the LIFO basis. In the questions below, you need to perform the necessary conversions to FIFO to obtain a just comparison with peer companies. The necessary financial information for the company for the year ended 31.December 2019 is presented below:

Statement of Financial Position as at 31 December 2019
US $million	2019	2018
Inventories	950	905

Statement of Profit or Loss and Other Comprehensive Income for the year ending 31 December 2019

Sales	8 100	7 400
Cost of sales	5 200	4 050
Depreciation and amortisation expense	605	720
Selling, general and administrative expense	900	750
Interest expense	92	65
Profit before tax	1 303	1 815
Income tax expense	378	526
Net income	925	1289
The LIFO reserve for each year	255	135
The effective tax rate	29%	29%

7.1 Explain each of the LIFO and FIFO methods of inventory valuation. Discuss when a company may choose to use LIFO rather than FIFO. Include in your response an explanation of the LIFO Reserve. (4) 7.2 Calculate the following using the FIFO method for the company for the year ended 31 December 2019: 7.2.1 Inventory value (2) 7.2.2 Cost of sales (2) 7.2.3 Net profit after tax. (2)