Treatment of cash flow - gaap & fasb, Financial Accounting

Assignment Help:

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)


Related Discussions:- Treatment of cash flow - gaap & fasb

the rate of interest on the gold is too high or too low, Suppose you are ...

Suppose you are a financial manager of Yuen Cheong Manufacturng Company. Due to the rising demand of product X, Yuen Cheong Manufacturng Company decides to open a new production pl

Numerical question, Data for 2013 were as follows: PBO, January 1, $244,000...

Data for 2013 were as follows: PBO, January 1, $244,000 and December 31, $274,000; pension plan assets (fair value) January 1, $190,000, and December 31, $233,000. The projected be

Identify total proceeds from new securitizations, Refer to Note 8, Securiti...

Refer to Note 8, Securitization Transactions (pp. 78-80) and an extract from Note 2, Additional Balance Sheet and Cash Flow Information (p. 72-73) from the Consolidated Financial S

State the types of business organizations, State the types of business orga...

State the types of business organizations There are numerous types of business organizations: Service business-doctors, lawyers, barber shop etc. Merchandising busin

Auditngrol ., what type of control procedures were ignored at daiwa

what type of control procedures were ignored at daiwa

Capital recovery factor, Equation illustrates the relationship in between P...

Equation illustrates the relationship in between PVA n , A, K and n. So manipulating this a bit: We find that A = PVA n [(k (1 + k) n )/((1 +k) n - 1)] [(k (1 + k) n )/(

What do you mean by put in shares of stock, Puts - A put is an option to se...

Puts - A put is an option to sell a number of shares of stock at a stated price within a definite period. Gain or loss on a put is short or long term depending on holding period of

Unrealized profit on closing inventory , UNREALIZED PROFIT ON CLOSING INVEN...

UNREALIZED PROFIT ON CLOSING INVENTORY Where one company has bought goods from another company in the group and part of these goods are included in the closing inventory, then t

Leases, Company A(lessee) will rent inventory for you for 3 years rather th...

Company A(lessee) will rent inventory for you for 3 years rather than buying it for the regular price of $240,000. Normally these units, which cost us $120,000 to produce, will las

Accounting equation, Can anyone here help me in this question ?? Kindly tel...

Can anyone here help me in this question ?? Kindly tell how can we solve it Mr. “A” starts a new business. Before to start the business operation, he has purchased vehicle Rs. 1,

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd