# ASC 230-942-55: Statement of Cash Flows — Financial Services—Depository and Lending — 55 Implementation Guidance and Illustrations Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/230/942/#55-implementation-guidance-and-illustrations) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-09T23:13:13.043Z to 2026-09-09T23:13:13.043Z Record version: sha256:0a1e3dce23e3d2321f1c8ace9970368d946915f7e9d4947231a80c38714b2f63 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-942-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/230/942/#55-implementation-guidance-and-illustrations) SEC content: no #### Illustrations ##### [230-942-55-1](https://asc.understandingaccounting.org/asc/230/942/#230-942-55-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:13.043Z to 2026-09-09T23:13:13.043Z Record version: sha256:a3368b9909df2504fae35dffdc9f19f6767c1bbf05d29269b2c2ab45b2da21eb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraphs [230-10-45-25 through 45-26](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-25) and [230-10-45-28 through 45-32](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-28) for a statement of cash flows under the direct method for a financial institution. The Example is intended as an illustration only. Also, the illustration of the reconciliation of net income to net cash provided by operating activities may provide detailed information in excess of that required for a meaningful presentation. Other formats or levels of detail may be appropriate for particular circumstances. ##### [230-942-55-2](https://asc.understandingaccounting.org/asc/230/942/#230-942-55-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:13.043Z to 2026-09-09T23:13:13.043Z Record version: sha256:2d1c0c937b263a26ab94672b27c3b5bcf33a46823ea4cd59094b428cc881512a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Presented below is a statement of cash flows for Financial Institution, Inc., a U.S. corporation that provides a broad range of financial services. This statement of cash flows illustrates the direct method of presenting cash flows from operating activities, as encouraged in paragraph [230-10-45-25](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-25). - ![](https://asc.understandingaccounting.org/asc-img/GUID-63EEC325-E03E-4D0E-A86C-890B796FC35E-low.gif) "FINANCIAL INSTITUTION, INC." STATEMENT OF CASH FLOWS "FOR THE YEAR ENDED DECEMBER 31, 19X1" Cash flows from operating activities: Interest received " $5,350 " Fees and commissions received " 1,320 " Proceeds from sales of trading securities " 20,550 " Purchase of trading securities " (21,075)" Financing revenue received under leases 60 Interest paid " (3,925)" Cash paid to suppliers and employees (795) Income taxes paid (471) Net cash provided by operating activities " $1,014 " Cash flows from investing activities: Proceeds from sales of investment securities " 2,225 " Purchase of investment securities " (4,000)" Net increase in credit card receivables " (1,300)" Net decrease in customer loans with maturities of 3 months or less " 2,250 " Principal collected on longer term loans " 26,550 " Longer term loans made to customers " (36,300)" Purchase of assets to be leased " (1,500)" Principal payments received under leases 107 Capital expenditures (450) "Proceeds from sale of property, plant, and equipment" 260 Net cash used in investing activities " (12,158)" Cash flows from financing activities: "Net increase in demand deposits, negotiable order of withdrawal accounts, and savings accounts" " 3,000 " Proceeds from sales of certificates of deposit " 63,000 " Payments for maturing certificates of deposit " (61,000)" Net increase in federal funds purchased " 4,500 " Net increase in 90-day borrowings 50 Proceeds from issuance of nonrecourse debt 600 Principal payment on nonrecourse debt (20) Proceeds from issuance of 6-month note 100 Proceeds from issuance of long-term debt " 1,000 " Repayment of long-term debt (200) Proceeds from issuance of common stock 350 Payments to acquire treasury stock (175) Dividends paid (240) Net cash provided by financing activities " 10,965 " Net decrease in cash and cash equivalents (179) Cash and cash equivalents at beginning of year " 6,700 " Cash and cash equivalents at end of year " $6,521 " Reconciliation of net income to net cash provided by operating activities: Net income " $1,056 " Adjustments to reconcile net income to net cash provided by operating activities: Depreciation $100 Provision for credit losses 300 Provision for deferred taxes 58 Loss on sale of investment securities 75 Gain on sale of equipment (50) Increase in trading securities (including unrealized appreciation of $25) (700) Increase in taxes payable 175 Increase in interest receivable (150) Increase in interest payable 75 Decrease in fees and commissions receivable 20 Increase in accrued expenses 55 Total adjustment (42) Net cash provided by operating activities " $1,014 " Supplemental schedule of noncash investing and financing activities: Conversion of long-term debt to common stock $500 Disclosure of accounting policy: For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks, and federal funds sold. Generally, federal funds are purchased and sold for one-day periods. ##### [230-942-55-3](https://asc.understandingaccounting.org/asc/230/942/#230-942-55-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:13.043Z to 2026-09-09T23:13:13.043Z Record version: sha256:24eac38871f5bcc9932dcf21741a33b697634c2366e9ad01243ffb45b7e7c8e1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Maintenance Update 2017-06.](https://asc.understandingaccounting.org/updates/maintenance-updates-2017/) ##### [230-942-55-4](https://asc.understandingaccounting.org/asc/230/942/#230-942-55-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:13.043Z to 2026-09-09T23:13:13.043Z Record version: sha256:83ada8547aaafed8042c885270b91f76ffdaa284a634457c93b5e2488f3c541a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Summarized below is financial information for the current year for Financial Institution, Inc., which provides the basis for the statement of cash flows presented in paragraphs [942-230-55-2 through 55-3](https://asc.understandingaccounting.org/asc/230/942/#230-942-55-2) . - ![](https://asc.understandingaccounting.org/asc-img/GUID-0E408551-BE5B-4A29-9F40-696FE1F29E0C-low.gif) "FINANCIAL INSTITUTION, INC. " STATEMENT OF FINANCIAL POSITION 1/1/X1 12/31/X1 Change Assets: Cash and due from banks " $4,400 " " $3,121 " " $(1,279)" Federal funds sold " 2,300 " " 3,400 " " 1,100 " Total cash and cash equivalents " 6,700 " " 6,521 " (179) Trading securities " 4,000 " " 4,700 " 700 Available-for-sale debt securities " 5,100 " " 6,800 " " 1,700 " Allowance for credit losses on available-for-sale debt securities (100) (100) - "Available-for-sale debt securities, net" " 5,000 " " 6,700 " " 1,700 " Credit card receivables " 8,500 " " 9,800 " " 1,300 " Loans " 28,000 " " 35,250 " " 7,250 " Allowance for credit losses on loans and credit card receivables (800) (850) (50) "Loans and credit card receivables, net" " 35,700 " " 44,200 " " 8,500 " Interest receivable 600 750 150 Fees and commissions receivable 60 40 (20) Investment in direct financing lease - 421 421 Investment in leveraged lease - 392 392 "Plant, property, and equipment, net" 525 665 140 Total assets " $52,585 " " $64,389 " " $11,804 " Liabilities: Deposits " $38,000 " " $43,000 " " $5,000 " Federal funds purchased " 7,500 " " 12,000 " " 4,500 " Short-term borrowings " 1,200 " " 1,350 " 150 Interest payable 350 425 75 Accrued expenses 275 330 55 Taxes payable 75 250 175 Dividends payable - 80 80 Long-term debt " 2,000 " " 2,300 " 300 Deferred taxes - 58 58 Total liabilities " 49,400 " " 59,793 " " 10,393 " Stockholders' equity: Common stock " 1,250 " " 2,100 " 850 Treasury stock - (175) (175) Retained earnings " 1,935 " " 2,671 " 736 Total stockholders' equity " 3,185 " " 4,596 " " 1,411 " Total liabilities and stockholders' equity " $52,585 " " $64,389 " " $11,804 " - ![](https://asc.understandingaccounting.org/asc-img/GUID-0F5AFC6D-6775-4FE3-B015-F2B6574FE6CE-low.gif) "FINANCIAL INSTITUTION, INC." STATEMENT OF INCOME "FOR THE YEAR ENDED DECEMBER 31, 19X1" Revenues: Interest income " $5,500 " Fees and commissions " 1,300 " Net gain on sales of trading and investment securities 75 Unrealized appreciation of trading securities 25 Lease income 60 Gain on sale of equipment 50 Total revenues " $7,010 " Expenses: Interest expense " 4,000 " Provision for credit losses 300 Operating expenses 850 Depreciation 100 Total expenses " 5,250 " Income before income taxes " 1,760 " Provision for income taxes 704 Net income " $1,056 " ##### [230-942-55-5](https://asc.understandingaccounting.org/asc/230/942/#230-942-55-5) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:13.043Z to 2026-09-09T23:13:13.043Z Record version: sha256:bcb5fcd7be3301eea38d0721bb09f203f8dca32d9719390f507f9d4089117bea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following transactions were entered into by Financial Institution, Inc., during 19X1 and are reflected in the preceding financial statements: 1. a Financial Institution sold trading securities with a carrying value of $20,400 for $20,550 and purchased trading securities for $21,075. Financial Institution recorded unrealized appreciation on trading securities of $25. Financial Institution also sold investment securities with a book value of $2,300 for $2,225 and purchased new investment securities for $4,000. 2. b Financial Institution had a net decrease in short-term loans receivable (those with original maturities of 3 months or less) of $2,250. Financial Institution made longer term loans of $36,300 and collected $26,550 on those loans. Financial Institution wrote off $250 of loans as uncollectible. 3. c Financial Institution purchased property for $500 to be leased under a direct financing lease. The first annual rental payment of $131 was collected. The portion of the rental payment representing interest income totaled $52. 4. d Financial Institution purchased equipment for $1,000 to be leased under a leveraged lease. The cost of the leased asset was financed by an equity investment of $400 and a long-term nonrecourse bank loan of $600. The first annual rental payment of $90, of which $28 represented principal, was collected and the first annual loan installment of $74, of which $20 represented principal, was paid. Pretax income of $8 was recorded. 5. e Financial Institution purchased new property, plant, and equipment for $450 and sold property, plant, and equipment with a book value of $210 for $260. 6. f Customer deposits with Financial Institution consisted of the following. - ![](https://asc.understandingaccounting.org/asc-img/GUID-B89D5CEB-E79C-4C63-A432-0AF642C9EC4E-low.gif) 1/1/X1 12/31/X1 Increase Demand deposits " $8,000 " " $8,600 " $600 Negotiable order of withdrawal accounts and savings accounts " 15,200 " " 17,600 " " 2,400 " Certificates of deposit " 14,800 " " 16,800 " " 2,000 " Total deposits " $38,000 " " $43,000 " " $5,000 " Sales of certificates of deposit during the year totaled $63,000; certificates of deposit with principal amounts totaling $61,000 matured. For presentation in the statement of cash flows, Financial Institution chose to report gross cash receipts and payments for both certificates of deposit with maturities of three months or less and those with maturities of more than three months. 7. g Short-term borrowing activity for Financial Institution consisted of repayment of a $200 90-day note and issuance of a 90-day note for $250 and a 6-month note for $100. 8. h Financial Institution repaid $200 of long-term debt and issued 5-year notes for $600 and 10-year notes for $400. 9. i Financial Institution issued $850 of common stock, $500 of which was issued upon conversion of long-term debt and $350 of which was issued for cash. 10. j Financial Institution acquired $175 of treasury stock. 11. k Financial Institution declared dividends of $320. The fourth quarter dividend of $80 was payable the following January. 12. l Financial Institution's provision for income taxes included a deferred provision of $58. 13. m In accordance with the definition of the term [cash](https://asc.understandingaccounting.org/glossary/c/#cash "Consistent with common usage, cash includes not only currency on hand but demand deposits with banks or other financial institutions. Cash also includes other kinds of accounts that have the general characteristics of demand deposits in that the customer may deposit additional funds at any time and also effectively may withdraw funds at any time without prior notice or penalty. All charges and credits to those accounts are cash receipts or payments to both the entity owning the account and the bank holding it. For example, a bank's granting of a loan by crediting the proceeds to a customer's demand deposit account is a cash payment by the bank and a cash receipt of the customer when the entry is made."), interest paid includes amounts credited directly to demand deposit, negotiable order of withdrawal accounts, and savings accounts.