1. Consider the differences between FIFO and LIFO costing methods and consider the inventory cost trends experienced by Valmont in fiscal 2018 and fiscal 2019. Why would using FIFO method for all inventory valuation have resulted in higher COGS in 2019 than a method that includes both FIFO and LIFO? Why was the opposite true in 2018? Use the data reported for the adjustment to the income statement accounts to inform your answer.

The impact of the change from LIFO to FIFO on the Company's Condensed Consolidated Statements of Earnings and Comprehensive Income for the fiscal years ended December 28, 2019 and December 29, 2018 are as follows: (in 000's, except earnings per share) Cost of sales Operating income Income tax expense Net earnings attributed to Valmont Industries, Inc Comprehensive (loss) income Net earnings per diluted share Fiscal Year 2019 As Previously Retrospectively Reported Adjusted 2,074,480 2,084,295 237,720 227,905 50.207 47,753 Adjustment 9,815 (9,815) (2,454) Fiscal Year 2018 As Previously Retrospectively Reported Adjusted 2.098,864 2,088,972 202,280 212,172 43,135 45,608 Adjustment (9,892) 9,892 2,473 153,769 149,037 7.06 146,408 141,676 6.73 (7,361) (7,361) (0.33) 94,351 78.772 4.20 101,770 86,191 4.53 7,419 7,419 0.33 The Company applied this change retrospectively to the earliest period presented. The resulting impact to the Condensed Consolidated Balance Sheet as of December 28, 2019 is as follows: December 28, 2019 Consolidated Balance Sheet Inventory Deferred income tax liability Retained earnings As Previously Reported 374,565 47,955 2,140,948 Adjustment 43.805 10,951 32.854 Retrospectively Adjusted 418,370 58,906 2,173,802