Page 241 - CA Final PARAM Digital Book.

QNO Pro forma adjustment New Course – (SM23)
3420.300 TITANIUM CNO -- Unique

Discuss the term “Pro forma adjustment” under SAE 3420

Answer Pro forma adjustments – In relation to unadjusted financial information, these include: (i) Adjustments to
unadjusted financial information that illustrate the impact of a significant event or transaction (“event” or
“transaction”) as if the event had occurred or the transaction had been undertaken at an earlier date selected
for purposes of the illustration; and (ii) Adjustments to unadjusted financial information that are necessary
for the pro forma financial information to be compiled on a basis consistent with the applicable financial
reporting framework of the reporting entity (“entity”) and its accounting policies under that framework. Pro
forma adjustments include the relevant financial information of a business that has been, or is to be, acquired
(“acquiree”), or a business that has been, or is to be, divested (“divestee”), to the extent that such
information is used in compiling the pro forma financial information (“acquiree or divestee financial
information”).

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