4-1. An investor is trying to compare the performance of two companies for year 20X8: Firm A reporting under IFRS, and Firm B reporting under U.S. GAAP. The following reported data are available: Firm A Sales $720,000 Firm B $400,000 COGS 560,000 320,000 Depreciation 25,000 12,000 Unrealized holding gains/losses (5,000) in OCI (2,000) in I/S for marketable securities Net Income 70,000 14,000 LIFO Reserve Number of shares outstanding Development costs (B/S) 100,000 12,000 (no amortization yet) $32,000 for year 20X8, and $12,000 for year 20X7 100,000 The investor identifies the following differences in the accounting policies of the two firms. Sales Inventory Marketable securities Firm A Sell-in Firm B Sell-through FIFO LIFO Non-trading Trading Certain development costs capitalized Expensed Depreciation Straight-line Accelerated The investor further finds that firm A would double its depreciation cost under accelerated depreciation method based on its tax filing information. In addition, it's estimated that if Firm A uses the conservative sell-through revenue recognition, the reported sales and COGS would reduce by about 10%. The investor also believes that the unrealized losses of $5,000 for firm A's marketable securities should be charged to the income statement given the firm's relatively active trading strategy in the past. The investor wants to compare the performance of the two firms by using gross profit margin and earnings per share as performance indicators. Required: Make necessary adjustments first and compare gross profit margin and earnings per share between the two firms for year 20X8 (ignore tax effect).