Boardwalk Real Estate Investment Trust reports the following selected information (in thousands) in its December 31, 2012, financial statements:

__________________________________2012..................2011

Cash................................................$138,656...........$255,894

Segregated tenants' security deposits............12,090...............11,561

Additional information:

1. Cash consists of bank balances and interest-earning bank accounts.

2. Segregated tenants' security deposits are held on behalf of tenants and are returned at the end of a lease if the apartment rented to the tenant is undamaged. They are considered restricted cash as they are held in trust bank accounts.

Instructions

(a) Why do you think that the security deposits are not reported along with the cash as cash equivalents?

(b) In which section of the statement of financial position would the segregated tenants' security deposits most likely be reported? Explain.