advance financial reporting

Q. No. 1: 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. X Inc. Y Inc. Sales: $1,000,000 $2 , 000,000 Less: Cost of Goods Sold $500,000 $1,600,000 Gross Margin $500,000 $400,000 Administrative Expenses $200,000 $300,000 Net Income: $300,000 $100,000 Required: Given the information provided, what are some possible causes for the differing results of these companies? Q. No. 2: X purchased 40% of Y on January 1, 2019 for $400,000. Y paid dividends of $50,000 in each year. Y's income statements for 2019 and 2020 showed the following: 2019 2020 Income (loss) before income taxes $100,000 ($60,000) Income tax expense (recovery) 40,000 (15,000) Net income (loss) $60,000 ($45,000) Other comprehensive income (net of tax) 20,000 25,000 Comprehensive income (loss) $80,000 ($20,000) At December 31, 2019, the fair value of the investment was $440,000 and at December 31, 2020, the fair value of the investment was $420,000. Required: Prepare X's journal entries for 2019 and 2020, assuming that this is a signicant inuence investment