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Pro forma statements for a proposed project should I. be compiled on a stand-alone basis II....

Pro forma statements for a proposed project should I. be compiled on a stand-alone basis II. include all the incremental cash flows related to the project III. generally include interest expense IV. include all project-related fixed asset acquisitions and disposals

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Answer #1

Ans:- Pro forma statements for a proposed project includes :-

all incremental cash flows related to projects.

financial interest expense

project related fixed asset acquisition and disposals

and it is compiled on a stand alone basis.

Ans;- All the options I,II,III,IV are correct.

Explanation:- Proforma statement is a statement which shows revenue, cost and other cash flows of a project during operation.

It is prepared and compiled in standalone basis not as per GAAP generally accepted accounting principle. As it is prepared for single entity to show its financial position and performance without adding its subsidiaries.

As per its format it includes all revenue costs, liabilities.

Project related costs like land acquisitions and disposal in project costs

Interest cost in financing cost head

and all cash out flow and inflows are adjusted to find out Net cash flows for developement.

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