Treatment of cash flow - gaap & fasb, Financial Accounting

The appropriate treatment of Cash flow in respect of the following items as per US GAAP & FASB - (230-10) 

1. Receipt of Insurance settlement proceeds of $2 mill. From an international insurance carrier towards claim from the insurance company for loss due to destruction of old building is an Operating cash inflow item since it involves outflow of cash and it is deployed for operating uses, for DB pension purpose. Hence, Alternative No. 2 applies and holds good. Here, the cash is received immediately and hence the question of timing of the cash receipt does not arise. (As per ASC, 230 of US GAAP, FASB revised Statement No.95 & Codification 230-10 of FASB).

2. Capital equipment purchase of $12m on credit terms 2%/15, net 45, and is for the acquisition of property, plant and equipment on account is not a cash outflow item itself as on date since it is still unpaid. Since the purchase is on credit basis, there is no immediate cash flow; here the timing comes into question and has a bearing on the reflection in the cash flow statement. Cash flow statement does not follow accrual basis of accounting but follows only the cash basis of accounting. Only when the cash outflow actually takes place that the treatment in the cash flow statement takes place. In view of this, Alternative No.2 indicating that there can be no reflection of cash flow in the cash flow statement, applies and holds good. (As per ASC 230 of US GAAP, FASB revised Statement No.95, & Codification 230-10 of FASB)

Posted Date: 2/28/2013 12:32:07 AM | Location : United States







Related Discussions:- Treatment of cash flow - gaap & fasb, Assignment Help, Ask Question on Treatment of cash flow - gaap & fasb, Get Answer, Expert's Help, Treatment of cash flow - gaap & fasb Discussions

Write discussion on Treatment of cash flow - gaap & fasb
Your posts are moderated
Related Questions
A 4 year project has an initial asset investment of 306600, and initial net working capital investment of 29200, and an annual operating cash flow of -46720. The fixed asset is ful

I am facing some problems in my assignment of Seller, Buyer, Seller’s Bank, and Buyer’s Bank. Can anybody suggest me the proper explanation for it? a. Draw the diagram of the tr

Investors need a 15% rate of return on Brooks Sisters' stock (rs = 15%). a.  What would the value of Brooks's stock be if the last dividend was D0 = $1.5 and if investors expect

SYSTEM ONE-THE HEAD OFFICE MAINTAINS ALL THE ACCOUNTS This system is suitable for an enterprise that has small branches (possibly in another area of the town or city where the

AFTER-ACQUIRED PROPERTY All property acquired by the bankrupt between the commencement of bankruptcy and his discharge passes to the trustee, except as stated above and below. (

Determine total payment: Mrs. Smith is a 70-year-old and hospitalized for a Kidney Transplant procedure .   General Hospital is a large urban hospital in San Francisco that

Financial Statement Analysis Group Project 2 ACCT3303 Spring 2013 Due Date: May 5 (by the end of the day) The specific purposes of this project are: 1. Apply to actual companies th

the role of international accounting toward promotion of generally accepted accounting principle

Q : The Trial Balance of Dephane Main Fashion Center contained the following accounts at November, 30 the end of the company fiscal year. Dephane Main Fashion Center Trial Balanc

A lawn care company started business on January 1, 2012. The company billed clients $105,000 for lawn care services completed in 2012. By December 31, the company had received $84,