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ASU 2016-18 Statement of Cash Flows - Restricted Cash

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FASB issued 2016-18 in November 2016. This standard changes how companies reflect restricted cash in cash flow statements.

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ASU 2016-18 Statement of Cash Flows - Restricted Cash

  1. 1. GUIDANCE ABOUT RESTRICTED CASH IN CASH FLOW STATEMENTS ASU 2016-18
  2. 2. WHY THE NEW STANDARD?
  3. 3. DIVERSITY EXISTS IN THE CLASSIFICATION AND PRESENTATION OF CHANGES IN RESTRICTED CASH
  4. 4. ENTITIES CLASSIFY TRANSFERS BETWEEN CASH AND RESTRICTED CASH AS OPERATING, INVESTING, OR FINANCING ACTIVITIES, OR AS A COMBINATION OF THOSE ACTIVITIES
  5. 5. THE DIVERSITY CREATES CONFUSION
  6. 6. WHO IS AFFECTED?
  7. 7. THE AMENDMENTS IN THIS UPDATE APPLY TO ALL ENTITIES THAT HAVE RESTRICTED CASH OR RESTRICTED CASH EQUIVALENTS AND ARE REQUIRED TO PRESENT A STATEMENT OF CASH FLOWS
  8. 8. WHAT ARE THE MAIN PROVISIONS?
  9. 9. REQUIRES THAT A STATEMENT OF CASH FLOWS EXPLAIN THE CHANGE DURING THE PERIOD IN THE TOTAL OF CASH, CASH EQUIVALENTS, AND AMOUNTS GENERALLY DESCRIBED AS RESTRICTED CASH OR RESTRICTED CASH EQUIVALENTS
  10. 10. RESTRICTED CASH IS INCLUDED IN THE DEFINITION OF CASH
  11. 11. WHEN EFFECTIVE?
  12. 12. PUBLIC COMPANIES: YEARS BEGINNING AFTER DECEMBER 15, 2017
  13. 13. OTHER ENTITIES: YEARS BEGINNING AFTER DECEMBER 15, 2018
  14. 14. CAN BE EARLY IMPLEMENTED
  15. 15. DISCLOSURES
  16. 16. THE NATURE OF RESTRICTIONS ON ITS CASH AND CASH EQUIVALENTS
  17. 17. ON THE FACE OF THE CASH FLOW STATEMENT OR IN THE NOTES, A DETAIL OF BALANCE SHEET LINES COMPRISING THE YEAR-END CASH TOTAL
  18. 18. Sample Disclosure Cash and cash equivalents $12,500 Restricted cash - short term 3,000 Restricted cash - long term 10,000 Total cash, cash equivalents and restricted cash Total per Cash Flow Statement $25,500
  19. 19. CHARLES HALL, CPA, CFE, MACC CPA-Scribo.com

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