Prospective Accounting Initiative 

Appendix 6

An Alternative AFTF Balance Sheet

Please refer to Chapter 4 for the notations and abbreviations used. 

In Chapter 4 we defined AFTF assets as the present value of positive future cash flows PV(+CF) and AFTF equities as the present value of future negative cash flows PV(-CF). Another possibility is to define AFTF assets as the present value of all future net operational cash flows and AFTF equities as the present value of all future net capital cash flows, i.e., 

Definition 5.1 AFTF Assets = PV(NOCF) This is the pure company perspective. 

Definition 5.2 AFTF equities = PV(NCCF) This is the pure shareholder perspective.

A curious thing happens with the balance sheet, apart from balancing. Both sides of the balance sheet represent the value of the company. It is somewhat natural for the present value of gains from operations to be labeled assets. It is also somewhat natural for the present value of net payments to the shareholders, as reported to the shareholders, to be labeled equities. In fact, it is shareholder equity. This alternative approach has interesting and far-reaching ramifications!

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