Refer to the following information provided in the chapter for Arcot Company: Consolidated financial statements in

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Refer to the following information provided in the chapter for Arcot Company:
• Consolidated financial statements in Exhibits 10.8 and 10.9.
• Differences between Local GAAP and U.S. GAAP in Exhibit 10.10.
• Reconciliation from Local GAAP to U.S. GAAP in Exhibit 10.11.
Use an electronic spreadsheet to complete the requirements of this problem. Required:
a. Use the information in Exhibits 10.8 and 10.9 to create worksheets for the restatement of income and retained earnings and the balance sheet for the year ended December 31, Year 2.
b. Prepare debit/credit reconciling entries for each Year 2 reconciliation item included in the reconciliation from Local GAAP to U.S. GAAP in Exhibit 10.11.
c. Post the debit/credit reconciling entries for Year 2 to the worksheets created in (a) and determine balances for Year 2 on a U.S. GAAP basis.
d. Calculate the following ratios on a Local GAAP and a U.S. GAAP basis for Year 2 and summarize the differences:
Current ratio [Current assets/Current liabilities]
Total asset turnover [Sales/Total assets at year-end]
Debt/equity ratio [Total liabilities/Total stockholders' equity]
Times interest earned [(Income before income taxes + Interest expense)/
Interest expense] Net profit margin [Net income /Sales]
Return on equity [Net income/Average total stockholders' equity] Operating profit margin [Operating income/Sales] Operating income as percent of total stockholders' equity [Operating income/Average total stockholders' equity] Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
GAAP
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...
Asset Turnover
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio.
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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International Accounting

ISBN: 978-0077862206

4th edition

Authors: Timothy Doupnik, Hector Perera

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