The Process for Calculating Present Values Is Often Called Discounting

question 34

True/False

The process for calculating present values is often called discounting future cash flows because future amounts are discounted to their present value.

---

Definitions:

Depreciated

Depreciation refers to the reduction in the value of an asset over time due to wear and tear or obsolescence.

Fair Value

The cost one would incur for acquiring an asset or the amount one would need to pay off a debt in a smooth transaction between parties in the market as of the date of valuation.

Land

The surface of the earth, considered as property and a basis for real estate transactions.

Successful-efforts Method

An accounting approach used in the oil and gas industry to capitalize only those costs associated with successfully locating new oil and natural gas reserves.