62. A European based company follows IFRS (International Financial Reporting
Standards) and capitalizes new product development costs. During 2008 they
spent €25 million on new product development and reported an amortization
expense related to a prior year’s new product development of €10 million. Other
information related to 2008 is as follows:
€ millions
Net income 225
Cash flow from operations 290
An analyst would like to compare the European company to a similar U.S. based
company and has decided to adjust their financial statements to U.S. GAAP.
Under U.S. GAAP, and ignoring tax effects, the cash flow from operations (€
millions) for the company would be closest to:
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