Compare Net Income (Loss) for the Year to Net Cash

question 58

Essay

Compare net income (loss) for the year to net cash flow from operating activities. Why are these amounts different? Briefly explain.

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Definitions:

Equity Method

A financial recording method where investments in other firms are initially noted at their purchase price and later updated to represent the investor's portion of the investee's profits or losses.

Fair-Value Method

An accounting approach where assets and liabilities are recorded at their current market values rather than their original cost.

Goodwill

An intangible asset arising when a company acquires another for a price higher than the fair market value of its net assets.

Other Comprehensive Income

Income that includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.