X Inc and Y Inc Required:
Given the Information Provided, What Are Some Possible Causes

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.

$$\begin{array} { | l | r | r | } \hline & \text { X Inc. } & \text { Y Inc. } \\\hline \text { Sales: } & \$ 1,000,000 & \$ 2,000,000 \\\hline \text { Less: } & & \\\hline \text { Cost of Goods Sold } & \$ 500,000 & \$ 1,600,000 \\\hline \text { Gross Margin } & \$ 500,000 & \$ 400,000 \\\hline \text { Administrative Expenses } & \$ 200,000 & \$ 300,000 \\\hline & & \\\hline \text { Net Income: } & \$ 300,000 & \$ 100,000 \\\hline\end{array}$$
Required:
Given the information provided, what are some possible causes for the differing results of these companies?