Swisscom AG

Swisscom AG, the principal provider of telecommunications in Switzerland, prepares consolidated financial statements in accordance with International Financial Reporting Standards (IFRS). Until 2007, Swisscom also reconciled its net income and stockholders’ equity to U.S. GAAP. Swisscom’s consolidated financial statements from a recent annual report are presented in their original format in Column 1 of the following worksheet. Note 27, Differences between International Financial Reporting Standards and U.S. Generally Accepted Accounting Principles, which includes Swisscom’s U.S. GAAP reconciliation, also is provided.

Required

1. Use the information in Note 27 to restate Swisscom’s consolidated financial statements in accordance with U.S. GAAP. Begin by constructing debit/credit entries for each reconciliation item, and then post these entries to columns 2 and 3 in the worksheets provided.

2. Calculate each of the following ratios under both IFRS and U.S. GAAP and determine the percentage differences between them using IFRS ratios as the base: Net income/Net revenues Operating income/Net revenues Operating income/Total assets Net income/Total shareholders’ equity Operating income/Total shareholders’ equity Current assets/Current liabilities Total liabilities/Total shareholders’ equity Which of these ratios is most (least) affected by the accounting standards used?

27. Differences between International Financial Reporting Standards and U.S. Generally Accepted Accounting Principles The consolidated financial statements of Swisscom have been prepared in accordance with International Financial Reporting Standards (IFRS), which differ in certain respects from generally accepted accounting principles in the United States (U.S. GAAP). Application of U.S. GAAP would have affected the balance sheet and net income (loss) to the extent described below. A description of the material differences between IFRS and U.S. GAAP as they relate to Swisscom are discussed in further detail below. Reconciliation of net income (loss) from IFRS to U.S. GAAP The following schedule illustrates the significant adjustments to reconcile net income (loss) in accordance with U.S. GAAP to the amounts determined under IFRS, for the current year ended December 31.