The Time Expected to Pass Before the Net Cash Flows

question 182

True/False

The time expected to pass before the net cash flows from an investment would return its initial cost is called the amortization period.

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Definitions:

Equity Method

An accounting technique used by firms to assess the profits earned through their investments in other companies by recognizing their share of the earnings.

Cost Method

An accounting method used to record investments at their original purchase cost.

Consolidated Net Income

Consolidated net income refers to the total earnings of a parent company and its subsidiaries after taxes and expenses, adjusted for minority interests.

Consolidated Retained Earnings

The cumulative amount of net income earned by a parent company and its subsidiaries, less any dividends paid, as presented in consolidated financial statements.