Cisco Systems, Inc., the world's largest networking products company, announced on May 8, 2001, that itspro forma
Question:
Cisco Systems, Inc., the world's largest networking products company, announced on May 8, 2001, that itspro forma earnings for the quarter ended April 28, 2001, were $230 million. The company also disclosed that actual earnings for the quarter, determined according to generally accepted accounting principles, were a lossof $2.69 billion.
Required:
1. What is meant by the term pro forma earnings in this context?
2. How do pro forma earnings relate to the concept of earnings quality?
3. Access the company's 10-Q (quarterly report) for the quarter ended April 28, 2001. You can go to the company's Internet site, or EDGAR (www.sec.gov). Using the company's income statement for the quarter and disclosure notes, reconcile the GAAP loss of $2.69 billion to the pro forma earnings figure of $230 million. Remember that both of these earnings (loss) figures are net of tax.
Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC). While the SEC previously stated that it intends to move from U.S. GAAP to the International Financial Reporting Standards (IFRS), the...
Step by Step Answer:
Requirement 1 Companies often voluntarily provide a pro forma earnings number when they announce ann...View the full answer
Intermediate Accounting
ISBN: 978-0077400163
6th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
