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

Expense recognition, Purchases office supplies on account costing $12,600 d...

Purchases office supplies on account costing $12,600 during July. It pays $5,500 for these purchases during July and the remainder during August. Office supplies on hand on July 1

Income statement, Income statement2013 2012 2011 Net revenue 5,075,390.. 4,...

Income statement2013 2012 2011 Net revenue 5,075,390.. 4,763,180.. 4,158,507 Cost of goods 1,377,242.. 1,297,102.. 1,134,966.. Gross profit 3,698,148.. 3,466,078.. 3,023,541 Total

Activity-based costing (abc), Activity-Based Costing (ABC) An accounti...

Activity-Based Costing (ABC) An accounting method that assigns identifiable costs and allocates common costs to definite product lines or business fragments Also known as pro

Describe accounting concept of a business combination, Describe the account...

Describe the accounting concept of a business combination. Business Combination: According to International Financial Reporting Standard-3 Business Combinations "A busi

Long as the yield to maturity, The Brownstone Corporation's bonds have 7 ye...

The Brownstone Corporation's bonds have 7 years remaining to maturity. Interest is paid yearly, the bonds have a $1,000 par value, and the coupon interest rate is 10%. a.

Statement of retained earnings, Statement of Retained Earnings Landon Corpo...

Statement of Retained Earnings Landon Corporation was organized on January 2, 2010, with the investment of $100,000 by each of its two stockholders. Net income for its first year o

Prepare a report addressing adjust financial statements, You are the audito...

You are the auditor of a small private company called XYZ Limited. Last year, which was 20X9, the audit went smoothly and every balance on the financial statements was correct. Thi

Prepare the income statement and balance sheet., Business start up accounti...

Business start up accounting transactions: Jane Whitfield, a sole proprietor, established the JW Flower Shop on January 2, 2010. The following transactions have occurred during

Amount of depreciation expense , In January 2011, Rogers Co. purchased a ma...

In January 2011, Rogers Co. purchased a machine that cost $85,000. The equipment is estimated to have a 5-year life and a salvage value of $15,000. a) Compute the amount of depr

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