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Financial Reporting and Analysis Q143

0. Aero Corp. prepares its financial statements using IFRS. It reports its interest payments on long-term debt as a financing activity. If the company were to switch to U.S. GAAP, the most likely effect on the cash flow statement would be a(n):

  • Option : C
  • Explanation : Under IFRS, interest payments can be reported either as operating or financing, but under U.S. GAAP interest payments can only be reported as operating cash flow. If interest payments are recategorized from financing to operating, cash flow from financing will increase and cashflow from operating will decrease.
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