Which of the following is true about reconciling foreign financial statements to U.S.GAAP?
A)A 10% increase in income when converting to U.S.GAAP means that stockholder's equity will increase by 10% after converting to U.S.GAAP.
B)A 10% increase in income when converting to U.S.GAAP means that stockholder's equity will increase by 20% after converting to U.S.GAAP.
C)A 10% increase in income when converting to U.S.GAAP means that stockholder's equity will decrease by 10% after converting to U.S.GAAP.
D)None of the above statements is true.

Question

Quizplus · Accepted Answer

None of the given statements is true. The conversion from foreign financial statements to U.S.GAAP involves adjustments to several financial statement items such as revenue, expenses, assets, liabilities, and equity. An increase in income does not necessarily mean an increase in stockholder's equity. The impact on equity will depend on many factors such as changes in the foreign currency exchange rates, differences in accounting policies, and the impact of adjustments made to reconcile the financial statements to U.S.GAAP.

Which of the Following Is True About Reconciling Foreign Financial