You, as auditor, are having a discussion with the controller of ABC Corp. concerning two events that affect the Income Statement for the year ended December 31, 2018. The two events are as follows:

(1)ABC decided, in 2017, to discontinue one of its unsuccessful product lines. The product line did not qualify as a component of the entity. The company recorded a restructuring loss on the 2017 income statement in the amount of $50,000. The company also recorded an offsetting liability for exit costs associated with the discontinuance. In 2018, management changed their mind and engaged in a more aggressive marketing policy for the product. As a result, the product experienced significant growth in sales and was profitable for the year. The controller wants to recognize a gain on the 2018 income statement to offset the restructuring loss reported on the 2017 income statement. His argument is the loss was an estimate based on an expected behavior that did not occur. He further argues that restating the income statement would confuse financial statement users.

(2)During the year, the company switched from LIFO to FIFO method of measuring inventory. The controller believes, since in the long run the same amount of Cost of Goods Sold will be shown under either method, the only disclosure needed is a footnote explaining the change and the effect of the change on the current year's net income.

You must decide if you agree with the controller on the proper Income statement presentation of these two items. Fully explain why you agree or disagree and, if you disagree, explain the proper Income Statement presentation.