Case 10-1 Impact of Investment Strategies Consider two companies, both manufacture autonomous vehicles, but they have different company strategies to acquire the necessary intellectual property to develop and produce their products.

MG is a traditional car manufacturer and with limited internal capacity and experience in the technologies needed for autonomous vehicles. The company undertook a series of acquisitions over the past five years, purchasing companies that have developed the needed sensors, artificial intelligence systems, and digital mapping tools to produce cars that can drive autonomously. They have spent a total of $100 billion on the companies they purchased. This amount includes $25 billion of intangible assets and $25 billion of goodwill.

MoWay, a division of a large software development and advertising firm, has developed all of the necessary technology for autonomous driving themselves. It has taken them five years to develop and test these technologies. They have spent a total of $100 billion in this massive research and development project.

In 2020, the year after these five-year projects were concluded, both companies launch wildly successful autonomous vehicles generating substantial sales, gross margins, and profits. The cars they developed sell for similar prices and have materials and labor costs that are approximately the same.

Required:

1.If you conducted a financial analysis of these two companies, how would their balance sheets, income statements, and financial ratios be similar and how would they be different?

2.Do these differences represent something useful to the users of their financial statements or are they only different because of the accounting artifacts resulting from their different strategies.