Hot Topic | November 2019

Investment Management: Presentation of restricted cash in the statement of cash flows

This Hot Topic highlights the implications of ASU 2016-18 for investment companies. The revisions change the presentation of restricted cash and restricted cash equivalents in the statement of cash flows.

Applicability

ASU 2016-18

  • Investment companies that are not exempt from the requirement to provide a statement of cash flows

Relevant dates

Effective date: Public business entities All other entities

Annual periods – Fiscal years beginning after

Dec. 15, 2017

Dec. 15, 2018

Interim periods – Fiscal years beginning after

Dec. 15, 2017

Dec. 15, 2019

Is early adoption permitted? Yes, including in an interim period
Transition method Retrospective transition

 

Key impacts

  • Amounts generally described as restricted cash and restricted cash equivalents are required to be included in the total cash and cash equivalents in the statement of cash flows. The total must reconcile to the same amounts on the statement of assets and liabilities.
  • The total amounts of cash and restricted cash in the statement of cash flows are no longer required to be the same as similarly titled line items or subtotals shown in the statement of assets and liabilities. If the amounts are presented in more than one line item in the statement of assets and liabilities, the amounts and corresponding line items must be disclosed and reconciled to the total amounts of cash and restricted cash in the statement of cash flows – either on the face of the statement of cash flows or in the notes to the financial statements.
  • Direct third-party cash receipts to and payments from a bank account or other financial institution containing restricted cash are classified as cash flows from operating, investing or financing activities in the statement of cash flows based on the nature of the cash flows.
  • Transfers between unrestricted and restricted cash and cash equivalents are not presented as cash flows from operating, investing or financing activities in the statement of cash flows.

Report contents

  • Key Impacts
  • Reminders for identifying restricted cash
  • Applying the amendments
  • Effective dates

Related content

 

 

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