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
Financial Accounting An accounting technique that records, interprets, and reports the historical cost transaction of an organization. An organization records these transaction


Omission to do something which a reasonable man, guided by those ordinary considerations that ordinarily regulate human affairs, would do or doing of something that a reasonable an

Fakari had the following asset at the ending of the year 2013 having started the business at the beginning of the same year. kSH.000 Account payables 15,800 equipment 46,000

$in million Pepsi Coca cola Net cash provided by operating activities $6,796 $8,186 Average current liability 8,772 13,355 Average total liability 22,909 21,491

I have a presentation on an article (around 20 pages). I also need 2 current real life examples (2 companies) to support the presentation. Can you do that? How long it will take yo

1. When preparing the operating activities section of the statement of cash flows using the indirect method, a decrease in accounts recievable is subtracted from net income. True o

Effect of receiving order The consequences of the making of the receiving order are: The debtor retains ownership, but loses possession and control of his property; Th

Fakari had the following asset at the ending of the year 2013 having started the business at the beginning of the same year. Ksh.000 Account payable 15,800 equipment 46,000

Let us assume you expect to obtain Rs.2000 yearly for the next three years. The receipt of Rs.2000 is evenly divided. One part that is: Rs.1000 is obtained at the beginning of the