Under which section of the balance sheet is cash restricted for plant expansion reported?
Experts have been vetted by Chegg as specialists in this subject. "Cash restricted for future plant expansion" is reported under Non-current assets on the balance she...
Expert-Verified Answer
"Cash restricted for plant expansion" would typically be reported under non-current assets on the balance sheet.
Current Assets: Can be converted to cash within a year or within the operating cycle, whichever is longer. Current assets include cash, accounts receivable, interest receivable, supplies, inventory, and other prepaid expenses.
Short term receivables would not be included with cash and cash equivalents on the balance sheet.
In short, yes—cash is a current asset and is the first line-item on a company's balance sheet. Cash is the most liquid type of asset and can be used to easily purchase other assets. Liquidity is the ease with which an asset can be converted into cash.
If it is not expected to be used within a one-year time frame, it is classified as a non-current asset. Since funds are separated on the balance sheet/income statement, restricted cash typically appears on a company's balance sheet as either "other restricted cash" or as "other assets."
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.
Restricted Cash refers to cash reserved by a company for a specified purpose and is thereby not readily available for use (e.g. fund working capital spending, capital expenditures).
In other words, amounts generally described as restricted cash will be included with cash and cash equivalents on the statement of cash flows. As a result, a transfer between restricted and unrestricted cash accounts will not be reported as a cash flow.
The most common classifications used within a classified balance sheet are as follows: Current assets. Long-term investments. Fixed assets (or Property, Plant, and Equipment)
What is not included in a balance sheet?
Key Takeaways
Off-balance sheet (OBS) assets are assets that don't appear on the balance sheet. OBS assets can be used to shelter financial statements from asset ownership and related debt. Common OBS assets include accounts receivable, leaseback agreements, and operating leases.
Expenses are not a part of a Company`s balance sheet.
- Fair market value of assets. Generally, items on the balance sheet are reflected at cost. ...
- Intangible assets (accumulated goodwill) ...
- Retail value of inventory on hand. ...
- Value of your team. ...
- Value of processes. ...
- Depreciation. ...
- Amortization. ...
- LIFO reserve.
Cash is usually classified as a current asset and includes unrestricted: Coins and currency, including petty cash funds.
Cash on a balance sheet includes currency, bank accounts and undeposited checks. It is necessary to keep some cash available in case of unforeseen expenses. Cash is reported in the "current assets" portion of the balance sheet.
Cash purchases are recorded more directly in the cash flow statement than in the income statement. In fact, specific cash outflow events do not appear on the income statement at all.
Restricted cash is typically reported under current assets on a company's balance sheet. However, if the restrictions extend beyond one year, it is classified under non-current assets. It must also be clearly identified as restricted.
A restricted asset is cash or another item of monetary value that is set aside to use for a particular stated purpose, primarily to satisfy regulatory or contractual requirements. Restricted assets, subject to special accounting procedures. They are segregated from other assets to mark clear delineations of their use.
Cash and cash equivalents refers to the line item on the balance sheet that reports the value of a company's assets that are cash or can be converted into cash immediately. Cash equivalents include bank accounts and some types of marketable securities such as commercial paper and short-term government bonds.
For example, a large amount of restricted cash might indicate the company is planning significant capital expenditures, like acquisitions or building a new factory. Restricted cash can also have an impact on liquidity metrics.
Where are cash and cash equivalents reported in the financial statements?
Cash and cash equivalents are actual cash on hand and securities that are similar to cash. The total for cash and cash equivalents is always shown on the top line of a company balance sheet because these current assets are the most liquid assets.
The guidance in ASC 210-10-45-4 indicates that claims to cash should be excluded from classification as current assets if such assets are restricted as to use for other than current operations or are segregated for the liquidation of long-term debts.
Key Takeaways
Unrestricted cash is cash that's readily available to be spent for any purpose and has not been pledged as collateral for a debt obligation or other purpose. Sometimes, cash might be restricted if the money is required to be held aside to secure a bank loan or credit facility.
In theory, restricted cash should only be considered as a cash equivalent if there is a relative liability which is included as a debt-like item. Nevertheless, it is crucial to understand and evaluate the specific features of each individual case.
A restricted account is one in which the bank will not allow the money to be withdrawn without a court order. To make a withdrawal, the guardian or conservator must first ask the judge for a court order.
