The president of Aggressive Ltd. has come to you for advice. Aggressive is a newly established company with prospects for high growth. Decisions must soon be made concerning accounting policies for external financial reporting. The following information pertains to the company's first year of operations (in thousands of dollars):

Revenue$108,000Purchases40,500Closing inventoryFIFO13,500Closing inventoryaverage cost10,800Depreciationstraight line3,400Depreciationdeclining balance6,800Development expense3,400Amortization of development over five years680Other expenses8,500Income tax rate20%