Swisscom AG, the principal provider of telecommunications in Switzerland, prepares consolidated financial statements in accordance with International Financial Reporting Standards (IFRS). Until 2007, Swisscom also reconciled its net income and stockholders' equity to U.S. GAAP. Swisscom's consolidated financial statements from a recent annual report are presented in their original format in Column 1 of the following worksheet. Note 27, Differences between International Financial Reporting Standards and U.S. Generally Accepted Accounting Principles, which includes Swisscom's U.S. GAAP reconciliation, also is provided.
Required
1. Use the information in Note 27 to restate Swisscom's consolidated financial statements in accordance with U.S. GAAP. Begin by constructing debit/credit entries for each reconciliation item, and then post these entries to columns 2 and 3 in the worksheets provided.
2. Calculate each of the following ratios under both IFRS and U.S. GAAP and determine the percentage differences between them, using IFRS ratios as the base:
Net income/Net revenues
Operating income/Net revenues
Operating income/Total assets
Net income/Total shareholders' equity
Operating income/Total shareholders' equity
Current assets/Current liabilities
Total liabilities/Total shareholders' equity
Which of these ratios is most (least) affected by the accounting standards used?