Restricted Cash Amendments Approved
Accounting Standards Update (“ASU”) No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, has been issued by the Financial Accounting Standards Board. The new amendments cover diversity in practice when companies with restricted cash or restricted cash equivalents must disclose any changes on cash flow statements.
Impacted companies must now explain the change in the total of cash, cash equivalents, and amounts usually labeled as restricted cash or restricted cash equivalents. Such amounts are to be included with cash and cash equivalents when reconciling both the beginning and end of period total amounts disclosed on cash flow statements.
ASU No. 2016-18 goes into effect for public entities for fiscal years, and interim periods within, starting after December 15, 2017. All other entities must apply the amendments for fiscal years starting after December 15, 2018, and interim periods within those years starting after December 15, 2019. Early adoption will be allowed, and ASU No. 2016-18 should be implemented using a retrospective transition method to each disclosed period.