Background: Two companies, X and Y, share identical return on assets ratios. However, their asset acquisition strategies and the timing of purchases differ significantly. Company X acquired most of its assets many years ago when prices were relatively low, while Company Y made its acquisitions in recent years when prices were comparatively high. Both companies maintain identical debt levels and record their assets at historical cost.

Company X:

Asset Acquisition Strategy: Purchased assets many years ago at lower prices.

Historical Cost Accounting: Records assets at historical cost.

Debt Levels: Identical to Company Y.

Return on Assets Ratio: Identical to Company Y.

Company Y:

Asset Acquisition Strategy: Purchased assets in recent years at higher prices.

Historical Cost Accounting: Records assets at historical cost.

Debt Levels: Identical to Company X.

Return on Assets Ratio: Identical to Company X.

Question: The return on assets ratio is most likely:

A. overstated for Company Y.

B. overstated for both companies.

C. overstated for Company X.

D. accurate for both companies.