1. What is pro forma reporting according to regulation SX of the SEC? How has pro forma...

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1. What is pro forma reporting according to regulation SX of the SEC? How has pro forma reporting been used by corporations over the years? Summarize the arguments for and against this type of reporting.
2. Exhibits 1 and 2 provide sample earnings announcements and pro forma information released by Proxim and Cisco Systems, respectively. Do you believe these disclosures are consistent with the spirit of the SEC regulation or are they corporate abused of financial disclosure? As a CFO of these companies, what would you have reported in your earnings announcement for the respective period?
3. Do you believe the SEC should permit the type of disclosure shown in exhibits 1 and 2? 4. What is the usefulness of the pro forma versus earnings disclosures found in Exhibits 1 and 2 with regards to evaluating
a. Recent financial performance;
b. Expectations of future earnings;
c. Credibility of management;
d. Quality of earnings; and
e. Equity valuation
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...

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1 What is pro forma reporting according to regulation SX of the SEC Pro forma reporting is required in circumstances where we need to show how transactions have affected historical financial statements had they occurred at an earlier date There are many typical transactions which require pro forma reporting which may be related on a significant portion of a business Proforma reporting will include A proforma balance sheet as of the end of the most recent period a proforma income statement ...View the full answer

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