You Are Comparing the Financial Statements of Two Companies, Ready

question 52

Essay

You are comparing the financial statements of two companies, Ready PLC and Marlet Inc., which operate in the same industry but different countries. Ready Inc. is a British company and prepares its financial statements using British accounting rules. Marlet is a U.S company and prepares its statements using U.S.GAAP.

The following differences in accounting methods are noted:
$\begin{array}{lll}&\text { Ready }&\text { Marlet }\\\text { Goodwill } &\text { Goodwill is immediately } &\text { Goodwill is capitalized and } \\&\text { written-off directly to } &\text { amortized over } 40 \text { years }\\&\text { stockholders' equity }\\\\\text { Inventory costing}&\text { FIFO is used for financial }&\text { LIFO allowed for tax and}\\&\text { reporting and tax purposes}&\text { financial reporting purposes}\\ \\\text {Research and }&\text {Capitalized and amortized }&\text {Expensed}\\\text { Development costs}\end{array}$
You want to restate the financial statements of Marlet in order to make them comparable with Ready PLC. Identify the adjustments you would make and the effect on the financial statements.

---

Definitions:

Layoffs

The act of temporarily or permanently dismissing employees from their jobs, often due to economic downturns, restructuring, or changes in business strategy.

Bankruptcies

Legal proceedings involving individuals or businesses that cannot repay their debts, resulting in the liquidation or reorganization of assets under court supervision.

Time And Motion Studies

Work measurement techniques used to establish standard times for tasks and enhance productivity by analyzing motions and time.

Employee Feedback

Information provided by employees about their job experience, organizational culture, and the behavior of colleagues and supervisors, used for improving work environment.