Accounting / July 9, 2018 / Justice Buckley
In most cases, the only way to determine the fair value of an ARO is to use an expected present value technique, where the probabilities of several possible outcomes are used. When constructing an expected present value of future cash flows, incorporate the following points into the calculation.
To perform a cash flow analysis, you can compare the cash flow statement over multiple months or years. You can also use the cash flow analysis to prepare an estimate or plan for future cash flows (i.e. a cash flow budget). This is important because cash flow is about timing - making sure you have money on hand when you need it to pay expenses, buy inventory and other assets, and pay your employees.
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