List the reasons for preparing pro forma financial statements from GAAP financial statements. What are typical adjustments made to GAAP statements when preparing pro forma statements used in forecasting?
Pro Forma statements are simplified presentation of forecast of
the future income and expense statement. It is designed for easy
understanding by investors and it is very easy to prepare.
Typical adjustments from GAAP
1. One time expenses like merger costs are excluded from proforma
statement.
2. Depreciation , good will, amortization ,etc which are present in
GAAP financial statements are excluded.
3. Proforma statements are hypothetical or forecasted statements
whereas GAAP financial statements are actual past financial
data.
Please Discuss in case of Doubt
Best of Luck. God Bless
Please Rate Well
Get Answers For Free
Most questions answered within 1 hours.