Describe retrospective application and the difference between prospective and retrospective application for the impact of a change in accounting principle. Why is retrospective application typically required when companies change an accounting principle such as the change from LIFO to FIFO?

For the inventory valued using LIFO, were inventory costs increasing or decreasing in $2018?$ How do you know this?

For the inventory valued using LIFO, were inventory costs increasing or decreasing in $2019?$ How do you know this?

$4.$ The cumulative journal entry adjustment that Valmont recorded on the first day of fiscal $2020($December $29,2019)$ to start the fiscal year using FIFO for all inventory is:

Dr$.$ Inventory $43,805$

Cr$.$ Deferred income tax liability $10,951$

Cr$.$ Retained earnings $32,854$

What does this journal entry tell you about the general trend of inventory production costs over time?

Why is the credit to retained earnings rather than to Cost of Goods Sold?