X Inc and Y Inc T

question 8

Essay

X Inc. and Y Inc. are virtually identical companies with identical cost structures and very similar business practices operating in the same lines of business. X Inc. is a public company based in Canada and follows IFRS while Y Inc. is a private enterprise based in Canada and follows ASPE. The following were the condensed income statements for both companies for the last year before both adopted IFRS.
Required:
Given the information provided, what are some possible causes for the differing results of these companies?
$$\begin{array} { | l | l | l | } \hline &\text {X Inc: } & \text { Y Inc. } \\\hline \text { Sales: } & \$ 1,000,000 & \$ 2,000,000 \\\hline \text { Less: } & & \\\hline \text { Cost of Goods Sold } & \$ 500,000 & \$ 1,600,000 \\\hline \text { Gross Margin } & \$ 500,000 & \$ 400,000 \\\hline \text { Administrative Expenses } & \$ 200,000 & \$ 300,000 \\\hline & & \\\hline \text { Net Income: } & \$ 300,000 & \$ 100,000 \\\hline\end{array}$$ T

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Definitions:

Androgen Insensitivity Syndrome

A genetic condition where a person who is genetically male is resistant to male hormones, resulting in feminine physical traits.

Turner Syndrome

A chromosomal disorder affecting females, characterized by the partial or complete absence of one of the X chromosomes.

Dihydrotestosterone

A potent androgen hormone derived from testosterone that plays a key role in the development of male characteristics and the growth of body hair.

Ambiguous Genitalia

A condition where an individual's external genitalia do not appear clearly male or female, complicating sex determination at birth.