Question
How should a liability with a 6 month maturity be classified in the financing section of the statement of cash flows? Is it net or
How should a liability with a 6 month maturity be classified in the financing section of the statement of cash flows? Is it net or gross?
ASC 230-10-45-8 "For certain items, the turnover is quick, the amounts are large, and the maturities are short. For certain other items, such as demand deposits of a bank and customer accounts payable of a broker-dealer, the entity is substantively holding or disbursing cash on behalf of its customers. Only the net changes during the period in assets and liabilities with those characteristics need be reported because knowledge of the gross cash receipts and payments related to them may not be necessary to understand the entity's operating, investing, and financing activities."
ASC 230-10-45-9
Providing that the original maturity of the asset or liability is three months or less, cash receipts and payments pertaining to any of the following qualify for net reporting for the reasons stated in the preceding paragraph:
- a. Investments (other than cash equivalents)
- b. Loans receivable
- c. Debt.
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