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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. Read More.

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New Cash Flow Statement Classification Guidance Issued

The Financial Accounting Standards Board has issued new guidance to address how specific cash receipts and payments are classified in cash flow statements. The amendments in Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, cover the following cash flow issues: Debt prepayment or debt extinguishment costs Settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant concerning the effective interest rate of the borrowing Contingent consideration payments made following a business combination Proceeds from the settlement of insurance claims Proceeds from the settlement. Read More.

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FASB Ratifies EITF Issue on Statement of Cash Flows

At its June 29 Board meeting, the Financial Accounting Standards Board (“FASB”) ratified the consensus reached at its June 10 Emerging Issues Task Force meeting regarding Issue No. 15-F, “Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments.” In particular, the FASB reached a consensus on the following issues: Debt Prepayment or Debt Extinguishment Costs Settlement of Zero-Coupon Debt Instruments and Other Debt Instruments with Insignificant Coupon Interest Rates Contingent Consideration Payments Made after a Business Combination Proceeds from the Settlement of Insurance Claims Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned Life Insurance. Read More.

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Exposure Draft on Statement of Cash Flows Issued

The Financial Accounting Standards Board (“FASB”) has issued an Exposure Draft for Proposed Accounting Standards Update, Statement of Cash Flows (Topic 230): Restricted Cash. The Exposure Draft addresses how entities classify and present restricted cash changes on cash flow statements under Topic 230. There has been diversity in practice as to how transfers between cash and restricted cash are classified. In addition, some entities have treated direct cash receipts into, and direct cash payments made from, a bank account that holds restricted cash are sometimes presented as cash inflows and cash outflows. Meanwhile, other entities disclose such cash flows as noncash investing. Read More.

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FASAC Meeting on Tuesday

Tomorrow at 8:30 a.m. EST, the Financial Accounting Standards Advisory Council (“FASAC”) will meet to discuss the role of judgment in financial reporting and possible improvements to cash flow statements. According to the Notice of Open Meetings , the FASAC will also hear highlights from the Financial Accounting Standards Board (“FASB”) chairman, and representatives from Securities and Exchange Commission’s Office of the Chief Accountant and Public Company Accounting Oversight Board’s Office of the Chief Auditor. All general sessions of the meeting will be open for public observation. Break-out group sessions, which are closed from the public, will be held from 9:15 –10:30 a.m. EST,. Read More.

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EITF Reaches Consensus-for-Exposure on Restricted Cash

At its March 3rd meeting, the Emerging Issues Task Force reached a consensus-for-exposure in regard to 16-A, “Restricted Cash.” The Financial Accounting Standards Board is expected to discuss this consensus-for-exposure at a meeting later this month. If ratified, the consensus-for-exposure will be open for comment. While no final consensuses were reached at the meeting, the EITF also discussed 15-F, “Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments.” The EITF will hold its next meeting on Thursday, May 12th.

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