China Eastern Airlines (CEA) Corporation Limited prepares a set of financial statements in accordance with IFRS (in Chinese renminbi—RMB). Until 2007, the company also provided a reconciliation of IFRS net income and net assets to U.S. GAAP. The following excerpt was taken from a recent annual report.

Required:
a. Explain the difference between (1) IFRS net income and U.S. GAAP net income and (2) IFRS net assets (owners' equity) and U.S. GAAP net assets that resulted from the accounting difference related to "revaluation of fixed assets."
b. Determine the directional impact (increase, decrease, no effect) the accounting difference described above would have on the following ratios calculated under IFRS and U.S. GAAP:
Current ratio (Current assets/Current liabilities) Debt-to-equity ratio (Total liabilities / Total owners' equity) Total asset turnover (Net sales/Average total assets)