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The American Corporation and the French Corporation are identical in every way. Both companies spend...

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Accounting

The American Corporation and the French Corporation are identical in every way. Both companies spend $200,000 for research costs in Year One as well as $100,000 in development costs during that same year. The American Corporation follows U.S. GAAP. The French Corporation follows IFRS and believes these development costs meet the criteria for capitalization. The capitalized costs are amortized over four years using the straight-line method and the half-year convention. a. What is the difference in reported net income between these two companies for Year One? b. Assuming no further amounts were spent for research and development in Year Two, what is the difference in reported net income between these two companies in that second year?

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