Accounting / July 19, 2018 / Pearl Bailey
Probability distribution. When calculating the expected present value of an ARO, and there are only two possible outcomes, assign a 50 percent probability to each one until you have additional information that alters the initial probability distribution. Otherwise, spread the probability across the full set of possible scenarios.
There is no specific guidance on which the profit amount should be used in the reconciliation. Different companies use operating profit, profit before tax, profit after tax, or net income. Clearly, the exact starting point for the reconciliation will determine the exact adjustments made to get down to an operating cash flow number.
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