. (U.S. GAAP) A and X are exactly alike except for their choice of accounting methods. A uses straight-line depreciation while X uses 200 percent declining balance depreciation. A uses FIFO and X uses LIFO inventory methods.

a. Both corporations issue 5,000 shares of $1 par value stock on January 1, for $15 per share.
b. Both A and X acquire equipment on January 1, for $40,000 cash. The equipment has a 5-year life and a $5,000 salvage value.
c. Both A and X purchase inventory as follows:

\begin{array}{lll}\text { Date } & \# \text { Units } & \text { Unit Price }\\1 / 1 & 100 & \$ 100 \\7 / 1 & 150 & 110 \\11 / 1 &110& 115 \\\text { Total } & 360 &\end{array}

d. Both A and X sell 200 units of inventory at $250 each. No credit sales are made.
e. Other expenses for the year, excluding depreciation, total $10,000.

Required:

Identify and give the balance of any balance sheet and income statement accounts that have different balances at year end for companies A and X based on the above information. Ignore any tax effects.

The FASB and IASB Are Working Jointly to Develop a Revised

True/False

Correct Answer:VerifiedUnlock this answer nowGet Access to more Verified Answers free of chargeAccess For Free

Correct Answer:
Verified
Unlock this answer now
Get Access to more Verified Answers free of charge