# ASC Topic 230: Statement of Cash Flows Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/230/) 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): 2026-09-09T23:11:17.967Z to 2026-09-09T23:14:06.654Z Record version: sha256:ef75f1ff735593697344130b7d2385fa24b5d921c9f970f97915321a4cf13726 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## Machine-generated topic summary ASC 230 requires every entity that presents both financial position and results of operations to present a statement of cash flows classifying cash receipts and payments as operating, investing, or financing activities, and to explain the change in the total of cash, cash equivalents, restricted cash, and restricted cash equivalents (230-10-15-3, 45-4, 45-24). The Overall subtopic (230-10) sets the core rules: the direct method (encouraged) or indirect method with a required reconciliation of net income to net cash flow from operating activities, gross reporting with narrow net-reporting exceptions, no cash flow per share, the predominance test for cash flows with more than one class, and disclosures of the cash equivalents policy, interest and taxes paid, noncash investing and financing activities, and cash restrictions (230-10-45-3, 45-7 through 45-9, 45-22 and 45-22A, 45-25 through 45-29, 50-1 through 50-8). The remaining subtopics graft narrow overlays onto that framework — foreign currency translation and the separate exchange rate effect line (230-830), banks' net reporting (230-942), operating classification of film costs (230-926), broadcast program license rights (230-920), real estate held for resale (230-970), time-sharing notes receivable (230-978), NFP donor-restricted and agency cash flows (230-958), investment company exemption and reinvested distributions (230-946), and the superseded development stage entity rules (230-915). The unifying idea is that classification follows the nature and purpose of the cash flow — inventory-like or revenue-producing activity is operating even when the related asset is capitalized. Source downloaded (UTC): 2026-09-09T23:11:17.967Z to 2026-09-09T23:11:49.870Z Record version: sha256:f2ef28dadc1b5d9985fc3c3a7810baa35d2a22a07732415143bebb7b62e5a6ca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-10: Statement of Cash Flows — Overall ### Machine-generated study aids ```json { "summary": "ASC 230-10 governs the statement of cash flows, which every entity presenting both financial position and results of operations must provide for each period results of operations are presented (230-10-15-3). It requires cash receipts and payments to be classified as operating, investing, or financing activities and requires the statement to explain the change in the total of cash, cash equivalents, restricted cash, and restricted cash equivalents (230-10-45-4, 45-10, 45-24). Operating cash flows may be presented by the direct method (encouraged) or the indirect method, but a business entity must reconcile net income to net cash flow from operating activities either way (230-10-45-25, 45-28, 45-29).", "key_points": [ "Every business entity or NFP presenting both financial position and results of operations must present a statement of cash flows; limited exemptions exist for defined benefit pension plans under Topic 960 and for investment companies and similar funds meeting the Level 1/Level 2 fair value, little-or-no-debt, and statement of changes in net assets conditions (230-10-15-3, 15-4).", "Cash receipts and payments are classified as operating, investing, or financing; investing includes loans made and collected, purchases/sales of other entities' debt and equity instruments and PP&E (230-10-45-12, 45-13), financing includes issuing equity and debt, dividends and distributions to owners, debt repayments, debt issue costs, and debt prepayment/extinguishment costs (230-10-45-14, 45-15), and operating is the residual, including interest and dividends received and interest and income taxes paid (230-10-45-16, 45-17).", "The statement must reconcile the beginning and ending totals of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents; transfers among those items are not reported as cash flow activities (230-10-45-4, 45-5, 45-24).", "Gross reporting is the default, but net reporting is permitted for cash equivalents and for investments (other than cash equivalents), loans receivable, and debt with original maturities of three months or less, and for items where the entity is substantively holding or disbursing cash for customers (230-10-45-7 through 45-9).", "Financial statements shall not report cash flow per share (230-10-45-3).", "For receipts and payments with aspects of more than one class, apply specific guidance first, then separate by identifiable source or use based on the nature of the cash flows; if inseparable, classify based on the predominant source or use (230-10-45-22, 45-22A).", "Required disclosures include the cash equivalents policy (230-10-50-1), interest paid net of capitalized amounts (and income taxes paid) under the indirect method (230-10-50-2), all noncash investing and financing activities affecting recognized assets or liabilities (230-10-50-3, 50-4), the nature of restrictions on cash (230-10-50-7), and a reconciliation of balance sheet line items to the cash totals when presented in more than one line item (230-10-50-8)." ], "categories": [ "Presentation", "Cash flows", "Disclosure", "Financial statement presentation" ], "audience_level": "introductory", "student_note": "Classification questions dominate exams: know that interest and dividends received and interest paid are operating, dividends paid are financing, and capitalized interest on self-constructed assets is investing. A frequent misunderstanding is thinking the reconciliation of net income to operating cash flow is optional under the direct method — for business entities it is always required (230-10-45-29), and only NFPs using the direct method are excused.", "related_topics": [ "958-230", "830-230", "946-230", "942-230", "205-20", "235-10" ], "key_concepts": [ "operating investing and financing activities", "cash equivalents", "restricted cash", "direct method", "indirect method", "reconciliation of net income to operating cash flow", "noncash investing and financing activities", "predominance principle" ] } ``` Source downloaded (UTC): 2026-09-09T23:11:17.967Z to 2026-09-09T23:11:17.967Z Record version: sha256:ec50911b86cf1e0481fac7fb2d8254982bb3b040b5dc6994a607f7eca51e8cc8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-10-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/230/10/#00-status) SEC content: no ##### [230-10-00-1](https://asc.understandingaccounting.org/asc/230/10/#230-10-00-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:17.967Z to 2026-09-09T23:11:17.967Z Record version: sha256:165dc4fd760e5e9ddf527bb2ddf470029b0931d73e94feebf83a2be26301c663 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Board-Designated Endowment FundAddedAccounting Standards Update No. 2016-1408/18/2016
Conditional ContributionAddedAccounting Standards Update No. 2018-0806/21/2018
ContractAddedAccounting Standards Update No. 2016-0202/25/2016
ContributionAmendedAccounting Standards Update No. 2018-0806/21/2018
ContributionAddedAccounting Standards Update No. 2016-1408/18/2016
Donor-Imposed ConditionAddedAccounting Standards Update No. 2018-0806/21/2018
Donor-Imposed RestrictionAddedAccounting Standards Update No. 2016-1408/18/2016
Donor-Restricted Endowment FundAddedAccounting Standards Update No. 2016-1408/18/2016
Effective Interest RateAmendedAccounting Standards Update No. 2016-1912/14/2016
Effective Interest RateAddedAccounting Standards Update No. 2016-1508/26/2016
Endowment FundAddedAccounting Standards Update No. 2016-1408/18/2016
Fair Value (3rd def.)AddedAccounting Standards Update No. 2012-0410/01/2012
Financial Asset (1st def.)SupersededAccounting Standards Update No. 2016-1912/14/2016
Financial Asset (1st def.)AddedAccounting Standards Update No. 2012-0510/22/2012
Financial Asset (2nd def.)AddedAccounting Standards Update No. 2016-1912/14/2016
Funds Functioning as EndowmentAddedAccounting Standards Update No. 2016-1408/18/2016
Inherent ContributionAddedAccounting Standards Update No. 2016-1408/18/2016
LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Lease LiabilityAddedAccounting Standards Update No. 2016-0202/25/2016
Lease PaymentsAddedAccounting Standards Update No. 2016-0202/25/2016
Lease TermAddedAccounting Standards Update No. 2016-0202/25/2016
LesseeAddedAccounting Standards Update No. 2016-0202/25/2016
LessorAddedAccounting Standards Update No. 2016-0202/25/2016
Net AssetsAddedAccounting Standards Update No. 2016-1408/18/2016
Net Assets with Donor RestrictionsAddedAccounting Standards Update No. 2016-1408/18/2016
Net Assets without Donor RestrictionsAddedAccounting Standards Update No. 2016-1408/18/2016
Promise to GiveAddedAccounting Standards Update No. 2018-0806/21/2018
Public Business EntityAmendedMaintenance Update 2017-06 (PDF)04/07/2017
Public Business EntityAddedAccounting Standards Update No. 2016-1811/17/2016
Purchased Financial Assets with Credit DeteriorationAmendedAccounting Standards Update No. 2016-1912/14/2016
Purchased Financial Assets with Credit DeteriorationAddedAccounting Standards Update No. 2016-1508/26/2016
Right-of-Use AssetAddedAccounting Standards Update No. 2016-0202/25/2016
Underlying AssetAddedAccounting Standards Update No. 2016-0202/25/2016
230-10-05-3AmendedAccounting Standards Update No. 2014-1006/10/2014
230-10-15-4AmendedAccounting Standards Update No. 2015-0705/01/2015
230-10-15-4AmendedAccounting Standards Update No. 2013-0806/07/2013
230-10-15-4AmendedAccounting Standards Update No. 2012-0410/01/2012
230-10-45-4AmendedAccounting Standards Update No. 2016-1811/17/2016
230-10-45-5AmendedAccounting Standards Update No. 2016-1811/17/2016
230-10-45-11 through 45-13
AmendedAccounting Standards Update No. 2016-0101/05/2016
230-10-45-12AmendedAccounting Standards Update No. 2012-0510/22/2012
230-10-45-12AmendedAccounting Standards Update No. 2016-1508/26/2016
230-10-45-13AmendedAccounting Standards Update No. 2016-1508/26/2016
230-10-45-14AmendedAccounting Standards Update No. 2016-1408/18/2016
230-10-45-14AmendedAccounting Standards Update No. 2016-0903/30/2016
230-10-45-15 through 45-17
AmendedAccounting Standards Update No. 2016-1508/26/2016
230-10-45-15AmendedAccounting Standards Update No. 2018-0706/20/2018
230-10-45-15AmendedAccounting Standards Update No. 2016-0903/30/2016
230-10-45-17AmendedAccounting Standards Update No. 2016-1408/18/2016
230-10-45-17AmendedAccounting Standards Update No. 2016-0903/30/2016
230-10-45-19AmendedAccounting Standards Update No. 2016-0101/05/2016
230-10-45-20AmendedAccounting Standards Update No. 2015-1006/12/2015
230-10-45-21AmendedAccounting Standards Update No. 2016-1306/16/2016
230-10-45-21AmendedAccounting Standards Update No. 2016-0101/05/2016
230-10-45-21AmendedAccounting Standards Update No. 2012-0410/01/2012
230-10-45-21AAmendedAccounting Standards Update No. 2023-0812/13/2023
230-10-45-21AAmendedAccounting Standards Update No. 2016-1912/14/2016
230-10-45-21AAddedAccounting Standards Update No. 2012-0510/22/2012
230-10-45-21B through 45-21D
AddedAccounting Standards Update No. 2016-1508/26/2016
230-10-45-22AmendedAccounting Standards Update No. 2016-1508/26/2016
230-10-45-22AAddedAccounting Standards Update No. 2016-1508/26/2016
230-10-45-24AmendedAccounting Standards Update No. 2016-1811/17/2016
230-10-45-24AmendedAccounting Standards Update No. 2015-0101/09/2015
230-10-45-24AmendedAccounting Standards Update No. 2014-0804/10/2014
230-10-45-24AAddedAccounting Standards Update No. 2014-0804/10/2014
230-10-45-25AmendedAccounting Standards Update No. 2016-1508/26/2016
230-10-45-25AmendedAccounting Standards Update No. 2016-0903/30/2016
230-10-45-27AAmendedAccounting Standards Update No. 2023-0812/13/2023
230-10-45-28AmendedMaintenance Update 2014-20 (PDF)09/29/2014
230-10-45-28AmendedAccounting Standards Update No. 2010-0802/02/2010
230-10-45-29AmendedAccounting Standards Update No. 2016-1408/18/2016
230-10-45-30AmendedAccounting Standards Update No. 2016-1408/18/2016
230-10-50-2AmendedAccounting Standards Update No. 2023-0912/14/2023
230-10-50-2AmendedAccounting Standards Update No. 2016-1508/26/2016
230-10-50-2AAddedAccounting Standards Update No. 2023-0912/14/2023
230-10-50-4AmendedAccounting Standards Update No. 2016-1508/26/2016
230-10-50-4AmendedAccounting Standards Update No. 2016-0202/25/2016
230-10-50-7AmendedMaintenance Update 2021-09 (PDF)08/20/2021
230-10-50-7AddedAccounting Standards Update No. 2016-1811/17/2016
230-10-50-8AmendedMaintenance Update 2021-09 (PDF)08/20/2021
230-10-50-8AddedAccounting Standards Update No. 2016-1811/17/2016
230-10-50-9AddedAccounting Standards Update No. 2023-0610/09/2023
230-10-55-10AmendedAccounting Standards Update No. 2016-1811/17/2016
230-10-55-10AmendedAccounting Standards Update No. 2016-1508/26/2016
230-10-55-10AmendedAccounting Standards Update No. 2016-0202/25/2016
230-10-55-11AmendedAccounting Standards Update No. 2016-0202/25/2016
230-10-55-12AAddedAccounting Standards Update No. 2016-1811/17/2016
230-10-55-13AmendedAccounting Standards Update No. 2016-1811/17/2016
230-10-55-13AmendedAccounting Standards Update No. 2016-1508/26/2016
230-10-55-13AmendedAccounting Standards Update No. 2016-0202/25/2016
230-10-55-14AmendedAccounting Standards Update No. 2023-0912/14/2023
230-10-55-15AmendedAccounting Standards Update No. 2016-0202/25/2016
230-10-55-18AAddedAccounting Standards Update No. 2016-1811/17/2016
230-10-55-19AmendedAccounting Standards Update No. 2016-1811/17/2016
230-10-55-19AmendedAccounting Standards Update No. 2016-0202/25/2016
230-10-55-20AmendedAccounting Standards Update No. 2016-1811/17/2016
230-10-55-20AmendedAccounting Standards Update No. 2016-1508/26/2016
230-10-55-20AmendedAccounting Standards Update No. 2016-0202/25/2016
230-10-60-2AmendedAccounting Standards Update No. 2016-0101/05/2016
230-10-60-2AAddedAccounting Standards Update No. 2016-0101/05/2016
230-10-60-5SupersededAccounting Standards Update No. 2014-1006/10/2014
230-10-65-1AddedAccounting Standards Update No. 2012-0510/22/2012
230-10-65-2AddedAccounting Standards Update No. 2016-1508/26/2016
230-10-65-3AddedAccounting Standards Update No. 2016-1811/17/2016
Source downloaded (UTC): 2026-09-09T23:11:21.017Z to 2026-09-09T23:11:21.017Z Record version: sha256:8ec15521d7ef0eba281869e2b8c02755f1c5dca0c16fd226c15977814e8be43b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-10-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/230/10/#05-overview-and-background) SEC content: no ##### [230-10-05-1](https://asc.understandingaccounting.org/asc/230/10/#230-10-05-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:21.017Z to 2026-09-09T23:11:21.017Z Record version: sha256:74415406678aeb8cafaac54637c9caeaa0583ba5f67bb2709152fcf3d37caa63 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Statement of [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.") Flows Topic presents standards for reporting cash flows in general-purpose financial statements. ##### [230-10-05-2](https://asc.understandingaccounting.org/asc/230/10/#230-10-05-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:21.017Z to 2026-09-09T23:11:21.017Z Record version: sha256:a0982f52b8cfbd5fcb302f2963811bf130719c27803291ae44ed345e06ffe5c2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Specific guidance is provided on all of the following: 1. a Classifying in the statement of cash flows of cash receipts and payments as either [operating activities](https://asc.understandingaccounting.org/glossary/o/#operating-activities "Operating activities include all transactions and other events that are not defined as investing or financing activities (see paragraphs 230-10-45-12230-10-45-13230-10-45-14230-10-45-15). Operating activities generally involve producing and delivering goods and providing services. Cash flows from operating activities are generally the cash effects of transactions and other events that enter into the determination of net income."), [investing activities](https://asc.understandingaccounting.org/glossary/i/#investing-activities "Investing activities include making and collecting loans and acquiring and disposing of debt or equity instruments and property, plant, and equipment and other productive assets, that is, assets held for or used in the production of goods or services by the entity (other than materials that are part of the entity's inventory). Investing activities exclude acquiring and disposing of certain loans or other debt or equity instruments that are acquired specifically for resale, as discussed in paragraphs 230-10-45-12 and 230-10-45-21."), or [financing activities](https://asc.understandingaccounting.org/glossary/f/#financing-activities "Financing activities include obtaining resources from owners and providing them with a return on, and a return of, their investment; receiving restricted resources that by donor stipulation must be used for long-term purposes; borrowing money and repaying amounts borrowed, or otherwise settling the obligation; and obtaining and paying for other resources obtained from creditors on long-term credit.") 2. b Applying the direct method and the indirect method of reporting cash flows 3. c Presenting the required information about noncash investing and financing activity and other events 4. d Classifying cash receipts and payments related to hedging activities. ##### [230-10-05-3](https://asc.understandingaccounting.org/asc/230/10/#230-10-05-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:21.017Z to 2026-09-09T23:11:21.017Z Record version: sha256:0aaf2bfef0552f2af770290c581da8b8af61e680895db35c4926d2d8d745c01a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Other Topics, including industry-specific Topics, may have Statement of Cash Flows Subtopics that address the Topic-specific requirements for the statement of cash flows. The guidance in those Subtopics is intended to be incremental to the guidance otherwise established in this Statement of Cash Flows Topic. Topics with incremental Statement of Cash Flows Subtopics are: 1. a Foreign Currency Matters, Subtopic 830-230 2. b [Subparagraph superseded by Accounting Standards Update No. 2014-10](https://asc.understandingaccounting.org/updates/asu-2014-10/). 3. c Entertainment—Films, Subtopic 926-230 4. d Financial Services—Depository and Lending, Subtopic 942-230 5. e Financial Services—Investment Companies, Subtopic 946-230 6. f Not-for-Profit Entities, Subtopic 958-230 7. g Real Estate—General, Subtopic 970-230 8. h Real Estate—Time Sharing Activities, Subtopic 978-230. Source downloaded (UTC): 2026-09-09T23:11:24.518Z to 2026-09-09T23:11:24.518Z Record version: sha256:f2b11e361a4f2ccdbd195461c9aeb2c2a9374b88cd1d67d15f4df83e5f0f59be Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-10-10: 10 Objectives [Read section](https://asc.understandingaccounting.org/asc/230/10/#10-objectives) SEC content: no ##### [230-10-10-1](https://asc.understandingaccounting.org/asc/230/10/#230-10-10-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:24.518Z to 2026-09-09T23:11:24.518Z Record version: sha256:aa44c0060235cd01a208b6c8bde76e93012652f97a70bef725c8bafcdeca1a84 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The primary objective of a statement of cash flows is to provide relevant information about the [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.") receipts and cash payments of an entity during a period. ##### [230-10-10-2](https://asc.understandingaccounting.org/asc/230/10/#230-10-10-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:24.518Z to 2026-09-09T23:11:24.518Z Record version: sha256:122241302caf485796008210345bedbeef60ef26afdfbf10e08a665bb9e9d145 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The information provided in a statement of cash flows, if used with related disclosures and information in the other financial statements, should help investors, creditors, and others (including donors) to do all of the following: 1. a Assess the entity's ability to generate positive future net cash flows 2. b Assess the entity's ability to meet its obligations, its ability to pay dividends, and its needs for external financing 3. c Assess the reasons for differences between net income and associated cash receipts and payments 4. d Assess the effects on an entity's financial position of both its cash and noncash investing and financing transactions during the period. Source downloaded (UTC): 2026-09-09T23:11:26.603Z to 2026-09-09T23:11:26.603Z Record version: sha256:3f9765e6be7ae6fd3610ad37a898b2469e77aa0b4c30358a217b8408bf2877db Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-10-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/230/10/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [230-10-15-1](https://asc.understandingaccounting.org/asc/230/10/#230-10-15-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:26.603Z to 2026-09-09T23:11:26.603Z Record version: sha256:e219368abf15b5a0bc6d2a4800f48127897cd49eebc5e7fac109e2bfc1b2f46f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Scope Section of the Overall Subtopic establishes the pervasive scope for the Statement of Cash Flows Topic. #### Entities ##### [230-10-15-2](https://asc.understandingaccounting.org/asc/230/10/#230-10-15-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:26.603Z to 2026-09-09T23:11:26.603Z Record version: sha256:9c3573e0f0c1401e6d2cea375f16bfb2b3d91fbd9266f54f93c0edd9e1147443 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Statement of Cash Flows Topic applies to all entities, including both business entities and not-for-profit entities (NFPs), with specific exceptions noted below. The phrase _investors, creditors, and others_ includes donors. The terms _income statement_ and _net income_ apply to a business entity; the terms _statement of activities_ and _change in net assets_ apply to an NFP. ##### [230-10-15-3](https://asc.understandingaccounting.org/asc/230/10/#230-10-15-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:26.603Z to 2026-09-09T23:11:26.603Z Record version: sha256:89d987dd867fb33ea44a92bd686e69cdc069f65a70ef80a27f7f79c160dc915f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A business entity or NFP that provides a set of financial statements that reports both financial position and results of operations shall also provide a statement of cash flows for each period for which results of operations are provided. ##### [230-10-15-4](https://asc.understandingaccounting.org/asc/230/10/#230-10-15-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:26.603Z to 2026-09-09T23:11:26.603Z Record version: sha256:8d22f4a58ab7697e2b96d51e72f4d204991dbaefc2ea68440c372fa8ae4192f3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Topic does not apply to the following entities: 1. a A statement of cash flows is not required to be provided by a defined benefit pension plan that presents financial information in accordance with the provisions of Topic 960. Other employee benefit plans that present financial information similar to that required by Topic 960 (including the presentation of plan investments at fair value) also are not required to provide a statement of cash flows. Employee benefit plans are encouraged to include a statement of cash flows with their annual financial statements when that statement would provide relevant information about the ability of the plan to meet future obligations (for example, when the plan invests in assets that are not highly liquid or obtains financing for investments). 2. b Provided that the conditions in (c) are met, a statement of cash flows is not required to be provided by the following entities: 1. 1 An investment company within the scope of Topic 946 on investment companies 2. 2 [Subparagraph superseded by Accounting Standards Update No. 2013-08](https://asc.understandingaccounting.org/updates/asu-2013-08/). 3. 3 A common trust fund, variable annuity account, or similar fund maintained by a bank, insurance entity, or other entity in its capacity as a trustee, administrator, or guardian for the collective investment and reinvestment of funds. 3. c For an investment company specified in (b) to be exempt from the requirement to provide a statement of cash flows, all of the following conditions must be met: 1. 1 [Subparagraph superseded by Accounting Standards Update No. 2013-08](https://asc.understandingaccounting.org/updates/asu-2013-08/). 2. 2 During the period, substantially all of the entity's investments were carried at [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") and classified in accordance with Topic 820 as Level 1 or Level 2 measurements or were measured using the practical expedient in paragraph [820-10-35-59](https://asc.understandingaccounting.org/asc/820/10/#820-10-35-59) to determine their fair values and are redeemable in the near term at all times. 3. 3 The entity had little or no debt, based on the average debt outstanding during the period, in relation to average total assets. For the purpose of determining average debt outstanding, obligations resulting from redemptions of shares by the entity from unsettled purchases of securities or similar assets, or from covered options written generally may be excluded. However, any extension of credit by the seller that is not in accordance with standard industry practices for redeeming shares or for settling purchases of investments shall be included in average debt outstanding. 4. 4 The entity provides a statement of changes in net assets. Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:bc8dff4ece4998e49aab8f0b243179d40115952a5bbf94a1aa455a7ab71e82ce Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-10-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/230/10/#45-other-presentation-matters) SEC content: no #### Form and Content ##### [230-10-45-1](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:a63aabaaba1f4fdb526993d909f0ca5a02ed7ef5c611c3792bb3480233bd0010 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A statement of [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.") flows shall report the cash effects during a period of an entity's operations, its investing transactions, and its financing transactions. ##### [230-10-45-2](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:e2b57a2082d23fc0c572a6741a6ed63c0c4dfe00af64ad2a49333467e17d3602 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reconciliation of net income and net cash flow from [operating activities](https://asc.understandingaccounting.org/glossary/o/#operating-activities "Operating activities include all transactions and other events that are not defined as investing or financing activities (see paragraphs 230-10-45-12230-10-45-13230-10-45-14230-10-45-15). Operating activities generally involve producing and delivering goods and providing services. Cash flows from operating activities are generally the cash effects of transactions and other events that enter into the determination of net income."), which generally provides information about the net effects of operating transactions and other events that affect net income and operating cash flows in different periods, also shall be provided. ##### [230-10-45-3](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:728b2f585259bff0ab0a571148b97ded9238c5ec48fccb8061385325b4a9d7c8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Financial statements shall not report an amount of cash flow per share. Neither cash flow nor any component of it is an alternative to net income as an indicator of an entity's performance, as reporting per-share amounts might imply. Reporting a contractually determined per-unit amount, such as a per unit amount of cash flow distributable under the terms of a partnership agreement or other agreement between an entity and its owners, is not the same as reporting a cash flow per-share amount intended to provide information useful to all investors and creditors and thus is not precluded by this Subtopic. ##### [230-10-45-4](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:e84fa39a55e5e3a972cea61fdda4a77f88a2a2a7737d20e61b721bf59b4af05b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A statement of cash flows shall explain the change during the period in the total of cash, [cash equivalents](https://asc.understandingaccounting.org/glossary/c/#cash-equivalents "Cash equivalents are short-term, highly liquid investments that have both of the following characteristics: Readily convertible to known amounts of cash So near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less qualify under that definition. Original maturity means original maturity to the entity holding the investment. For example, both a three-month U.S. Treasury bill and a three-year U.S. Treasury note purchased three months from maturity qualify as cash equivalents. However, a Treasury note purchased three years ago does not become a cash equivalent when its remaining maturity is three months. Examples of items commonly considered to be cash equivalents are Treasury bills, commercial paper, money market funds, and federal funds sold (for an entity with banking operations)."), and amounts generally described as restricted cash or restricted cash equivalents. The statement shall use descriptive terms such as cash or cash and cash equivalents rather than ambiguous terms such as funds. When cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents are presented in more than one line item within the statement of financial position, an entity shall provide the disclosures required in paragraph [230-10-50-8](https://asc.understandingaccounting.org/asc/230/10/#230-10-50-8). ##### [230-10-45-5](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-5) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:7cf4254c66494b2727cbf482cf70773bdcf22c4c4bde7de4216acac955219df9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cash purchases and sales of items commonly considered to be cash equivalents generally are part of the entity's cash management activities rather than part of its operating, investing, and [financing activities](https://asc.understandingaccounting.org/glossary/f/#financing-activities "Financing activities include obtaining resources from owners and providing them with a return on, and a return of, their investment; receiving restricted resources that by donor stipulation must be used for long-term purposes; borrowing money and repaying amounts borrowed, or otherwise settling the obligation; and obtaining and paying for other resources obtained from creditors on long-term credit."), and details of those transactions need not be reported in a statement of cash flows. In addition, transfers between cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents are not part of the entity's operating, investing, and financing activities, and details of those transfers are not reported as cash flow activities in the statement of cash flows. ##### [230-10-45-6](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-6) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:0b90d76e2042ec4e2dc8c21586e31ebad23cfa188d027b4b6a000021f623fcc1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Not all investments that qualify are required to be treated as cash equivalents. An entity shall establish a policy concerning which short-term, highly liquid investments that satisfy the definition of cash equivalents are treated as cash equivalents. For example, an entity having banking operations might decide that all investments that qualify except for those purchased for its trading account will be treated as cash equivalents, while an entity whose operations consist largely of investing in short-term, highly liquid investments might decide that all those items will be treated as investments rather than cash equivalents. ##### [230-10-45-7](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-7) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:40539fd22eb45f19f5d6c921442fdf236f22eb13643fa8668e049049416dfa87 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Generally, information about the gross amounts of cash receipts and cash payments during a period is more relevant than information about the net amounts of cash receipts and payments. However, the net amount of related receipts and payments provides sufficient information not only for cash equivalents, as noted in paragraph [230-10-45-5](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-5), but also for certain other classes of cash flows specified in paragraphs [230-10-45-8 through 45-9](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-8) and paragraph [230-10-45-28](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-28). ##### [230-10-45-8](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-8) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:896f9ec401842d9dab467051ba9b0946c787512337e37da5f9464c41de41ea16 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For certain items, the turnover is quick, the amounts are large, and the maturities are short. For certain other items, such as demand deposits of a bank and customer accounts payable of a broker-dealer, the entity is substantively holding or disbursing cash on behalf of its customers. Only the net changes during the period in assets and liabilities with those characteristics need be reported because knowledge of the gross cash receipts and payments related to them may not be necessary to understand the entity's operating, investing, and financing activities. ##### [230-10-45-9](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-9) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:4fe6d5286ae48bc78feac7975fec61a4376d86bd56a066466d6685322d75635b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Providing that the original maturity of the asset or liability is three months or less, cash receipts and payments pertaining to any of the following qualify for net reporting for the reasons stated in the preceding paragraph: 1. a Investments (other than cash equivalents) 2. b Loans receivable 3. c Debt. For purposes of this paragraph, amounts due on demand are considered to have maturities of three months or less. For convenience, credit card receivables of financial services operations—generally, receivables resulting from cardholder charges that may, at the cardholder's option, be paid in full when first billed, usually within one month, without incurring interest charges and that do not stem from the entity's sale of goods or services—also are considered to be loans with original maturities of three months or less. #### Classification ##### [230-10-45-10](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-10) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:2596b84109277982a85e261e6bb261ae1bd83e71d3b9131c83eb718046907c41 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A statement of cash flows shall classify cash receipts and cash payments as resulting from investing, financing, or operating activities. ##### [230-10-45-11](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-11) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:23cda495a2019795a8f8e47472c0535d39df47b205ea0a04a806f019b6d020e8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cash flows from purchases, sales, and maturities of available-for-sale debt securities shall be classified as cash flows from [investing activities](https://asc.understandingaccounting.org/glossary/i/#investing-activities "Investing activities include making and collecting loans and acquiring and disposing of debt or equity instruments and property, plant, and equipment and other productive assets, that is, assets held for or used in the production of goods or services by the entity (other than materials that are part of the entity's inventory). Investing activities exclude acquiring and disposing of certain loans or other debt or equity instruments that are acquired specifically for resale, as discussed in paragraphs 230-10-45-12 and 230-10-45-21.") and reported gross in the statement of cash flows. ##### [230-10-45-12](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-12) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:bed31b7d820dd2f18f7919a9ebfb61dd06c616885bfb00233dc287775917c305 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All of the following are cash inflows from investing activities: 1. a Receipts from collections or sales of loans made by the entity and of other entities' debt instruments (other than cash equivalents, certain debt instruments that are acquired specifically for resale as discussed in paragraph [230-10-45-21](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-21), and certain donated debt instruments received by not-for-profit entities (NFPs) as discussed in paragraph [230-10-45-21A](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-21A)) and collections on a transferor's beneficial interests in a securitization of the transferor's trade receivables 2. b Receipts from sales of equity instruments of other entities (other than certain equity instruments carried in a trading account as described in paragraph [230-10-45-18](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-18)and certain donated equity instruments received by NFPs as discussed in paragraph [230-10-45-21A](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-21A)) and from returns of investment in those instruments 3. c Receipts from sales of property, plant, and equipment and other productive assets 4. d [Subparagraph not used](https://asc.understandingaccounting.org/updates/asu-2016-01/). 5. e Receipts from sales of loans that were not specifically acquired for resale. That is, if loans were acquired as investments, cash receipts from sales of those loans shall be classified as investing cash inflows regardless of a change in the purpose for holding those loans. For purposes of this paragraph, receipts from disposing of loans, debt or equity instruments, or property, plant, and equipment include directly related proceeds of insurance settlements, such as the proceeds of insurance on a building that is damaged or destroyed. ##### [230-10-45-13](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-13) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:23d605dc6ee64c21dff02de4f40152dfa33c592a47cab8cf3e63b9e5ce755cf9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All of the following are cash outflows for investing activities: 1. a Disbursements for loans made by the entity and payments to acquire debt instruments of other entities (other than cash equivalents and certain debt instruments that are acquired specifically for resale as discussed in paragraph [230-10-45-21](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-21)). 2. b Payments to acquire equity instruments of other entities (other than certain equity instruments carried in a trading account as described in paragraph [230-10-45-18](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-18)). 3. c Payments at the time of purchase or soon before or after purchase to acquire property, plant, and equipment and other productive assets, including interest capitalized as part of the cost of those assets. Generally, only advance payments, the down payment, or other amounts paid at the time of purchase or soon before or after purchase of property, plant, and equipment and other productive assets are investing cash outflows. However, incurring directly related debt to the seller is a financing transaction (see paragraphs [230-10-45-14 through 45-15](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-14) ), and subsequent payments of principal on that debt thus are financing cash outflows. 4. d Payments made soon after the acquisition date of a business combination by an acquirer to settle a contingent consideration liability. ##### [230-10-45-14](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-14) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:a14739f484f3be855a57763423bc83090734fb8bfa3bedf8d0626c51dcda456a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All of the following are cash inflows from financing activities: 1. a Proceeds from issuing equity instruments 2. b Proceeds from issuing bonds, mortgages, notes, and from other short- or long-term borrowing 3. c Receipts from [contributions](https://asc.understandingaccounting.org/glossary/c/#contribution "An unconditional transfer of cash or other assets, as well as unconditional promises to give, to an entity or a reduction, settlement, or cancellation of its liabilities in a voluntary nonreciprocal transfer by another entity acting other than as an owner. Those characteristics distinguish contributions from:Exchange transactions, which are reciprocal transfers in which each party receives and sacrifices approximately commensurate valueInvestments by owners and distributions to owners, which are nonreciprocal transfers between an entity and its ownersOther nonreciprocal transfers, such as impositions of taxes or legal judgments, fines, and thefts, which are not voluntary transfers. In a contribution transaction, the resource provider often receives value indirectly by providing a societal benefit although that benefit is not considered to be of commensurate value. In an exchange transaction, the potential public benefits are secondary to the potential direct benefits to the resource provider. The term contribution revenue is used to apply to transactions that are part of the entity's ongoing major or central activities (revenues), or are peripheral or incidental to the entity (gains). See also Inherent Contribution and Conditional Contribution.") and investment income that by donor stipulation are restricted for the purposes of acquiring, constructing, or improving property, plant, equipment, or other long-lived assets or establishing or increasing a [donor-restricted endowment fund](https://asc.understandingaccounting.org/glossary/d/#donor-restricted-endowment-fund "An endowment fund that is created by a donor stipulation (donors include other types of contributors, including makers of certain grants) requiring investment of the gift in perpetuity or for a specified term. Some donors or laws may require that a portion of income, gains, or both be added to the gift and invested subject to similar restrictions. The term does not include a Board-Designated Endowment Fund. See Endowment Fund.") 4. d Proceeds received from derivative instruments that include financing elements at inception, whether the proceeds were received at inception or over the term of the derivative instrument, other than a financing element inherently included in an at-the-market derivative instrument with no prepayments 5. e [Subparagraph superseded by Accounting Standards Update No. 2016-09](https://asc.understandingaccounting.org/updates/asu-2016-09/). ##### [230-10-45-15](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-15) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:5a8818bd0c8ecd8e3d05ebbcd8edee715744ace1312378c46714fe26e9fbcd9d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All of the following are cash outflows for financing activities: 1. a Payments of dividends or other distributions to owners, including outlays to reacquire the entity's equity instruments. Cash paid to a tax authority by a grantor when withholding shares from a grantee's award for tax-withholding purposes shall be considered an outlay to reacquire the entity's equity instruments. 2. b Repayments of amounts borrowed, including the portion of the repayments made to settle zero-coupon debt instruments that is attributable to the principal or the portion of the repayments made to settle other debt instruments with coupon interest rates that are insignificant in relation to the [effective interest rate](https://asc.understandingaccounting.org/glossary/e/#effective-interest-rate "The rate of return implicit in the financial asset, that is, the contractual interest rate adjusted for any net deferred fees or costs, premium, or discount existing at the origination or acquisition of the financial asset. For purchased financial assets with credit deterioration, however, to decouple interest income from credit loss recognition, the premium or discount at acquisition excludes the discount embedded in the purchase price that is attributable to the acquirer's assessment of credit losses at the date of acquisition.") of the borrowing that is attributable to the principal. 3. c Other principal payments to creditors who have extended long-term credit. See paragraph [230-10-45-13(c)](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-13), which indicates that most principal payments on seller-financed debt directly related to a purchase of property, plant, and equipment or other productive assets are financing cash outflows. 4. d Distributions to counterparties of derivative instruments that include financing elements at inception, other than a financing element inherently included in an at-the-market derivative instrument with no prepayments. The distributions may be either at inception or over the term of the derivative instrument. 5. e Payments for debt issue costs. 6. f Payments, or the portion of the payments, not made soon after the acquisition date of a business combination by an acquirer to settle a contingent consideration liability up to the amount of the contingent consideration liability recognized at the acquisition date, including measurement-period adjustments, less any amounts paid soon after the acquisition date to settle the contingent consideration liability. See also paragraph [230-10-45-17(ee)](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-17). 7. g Payments for debt prepayment or debt extinguishment costs, including third-party costs, premiums paid, and other fees paid to lenders that are directly related to the debt prepayment or debt extinguishment, excluding accrued interest. ##### [230-10-45-16](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-16) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:792a9ac56cf4953cf54aa973b52bfbaf76abba78e0bee22b22abd9dca4f8f1e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All of the following are cash inflows from operating activities: 1. a Cash receipts from sales of goods or services, including receipts from collection or sale of accounts and both short- and long-term notes receivable from customers arising from those sales. The term _goods_ includes certain loans and other debt and equity instruments of other entities that are acquired specifically for resale, as discussed in paragraph [230-10-45-21](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-21). 2. b Cash receipts from returns on loans, other debt instruments of other entities, and equity securities—interest and dividends. 3. c All other cash receipts that do not stem from transactions defined as investing or financing activities, such as amounts received to settle lawsuits and refunds from suppliers. ##### [230-10-45-17](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-17) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:bfd3f1717c472581d48db982375b11589508d85119060deec5ae132a5e1d93bb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All of the following are cash outflows for operating activities: 1. a Cash payments to acquire materials for manufacture or goods for resale, including principal payments on accounts and both short- and long-term notes payable to suppliers for those materials or goods. The term _goods_ includes certain loans and other debt and equity instruments of other entities that are acquired specifically for resale, as discussed in paragraph [230-10-45-21](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-21). 2. b Cash payments to other suppliers and employees for other goods or services. 3. c Cash payments to governments for taxes, duties, fines, and other fees or penalties. 4. d Cash payments to lenders and other creditors for interest, including the portion of the payments made to settle zero-coupon debt instruments that is attributable to accreted interest related to the debt discount or the portion of the payments made to settle other debt instruments with coupon interest rates that are insignificant in relation to the [effective interest rate](https://asc.understandingaccounting.org/glossary/e/#effective-interest-rate "The rate of return implicit in the financial asset, that is, the contractual interest rate adjusted for any net deferred fees or costs, premium, or discount existing at the origination or acquisition of the financial asset. For purchased financial assets with credit deterioration, however, to decouple interest income from credit loss recognition, the premium or discount at acquisition excludes the discount embedded in the purchase price that is attributable to the acquirer's assessment of credit losses at the date of acquisition.") of the borrowing that is attributable to accreted interest related to the debt discount. For all other debt instruments, an issuer shall not bifurcate cash payments to lenders and other creditors at settlement for amounts attributable to accreted interest related to the debt discount, nor classify such amounts as cash outflows for operating activities. 5. e Cash payment made to settle an asset retirement obligation. 6. ee Cash payments, or the portion of the payments, not made soon after the acquisition date of a business combination by an acquirer to settle a contingent consideration liability that exceed the amount of the contingent consideration liability recognized at the acquisition date, including measurement-period adjustments, less any amounts paid soon after the acquisition date to settle the contingent consideration liability. See also paragraph [230-10-45-15(f)](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-15). 7. f All other cash payments that do not stem from transactions defined as investing or financing activities, such as payments to settle lawsuits, cash [contributions](https://asc.understandingaccounting.org/glossary/c/#contribution "An unconditional transfer of cash or other assets, as well as unconditional promises to give, to an entity or a reduction, settlement, or cancellation of its liabilities in a voluntary nonreciprocal transfer by another entity acting other than as an owner. Those characteristics distinguish contributions from:Exchange transactions, which are reciprocal transfers in which each party receives and sacrifices approximately commensurate valueInvestments by owners and distributions to owners, which are nonreciprocal transfers between an entity and its ownersOther nonreciprocal transfers, such as impositions of taxes or legal judgments, fines, and thefts, which are not voluntary transfers. In a contribution transaction, the resource provider often receives value indirectly by providing a societal benefit although that benefit is not considered to be of commensurate value. In an exchange transaction, the potential public benefits are secondary to the potential direct benefits to the resource provider. The term contribution revenue is used to apply to transactions that are part of the entity's ongoing major or central activities (revenues), or are peripheral or incidental to the entity (gains). See also Inherent Contribution and Conditional Contribution.") to charities, and cash refunds to customers. ##### [230-10-45-18](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-18) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:5db8ed559f0ef06ccf3a9026c4644e97c3ad9d66381eab8d3c9f4a6ffb7fc663 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Banks, brokers and dealers in securities, and other entities may carry securities and other assets in a trading account. Characteristics of trading account activities are described in Topics 255 and 940. ##### [230-10-45-19](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-19) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:8e75801d866b56a76ee55fffb1a710e47cd9f18fedbe45a61a9d52ae434ec5ce Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cash receipts and cash payments resulting from purchases and sales of securities classified as trading debt securities accounted for in accordance with Topic 320and equity securities accounted for in accordance with Topic 321shall be classified pursuant to this Topic based on the nature and purpose for which the securities were acquired. ##### [230-10-45-20](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-20) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:bc8720f94766a826c4c30df9baa360f13ece3a605c2a5d94a7e9df6e47489458 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cash receipts and cash payments resulting from purchases and sales of other securities and other assets shall be classified as operating cash flows if those assets are acquired specifically for resale and are carried at [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") in a trading account. ##### [230-10-45-21](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-21) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:55b181aa779eec9a88ec4d3e362b6750d06aa78c50ec8edcefc16e1ac1d8e12b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some loans are similar to debt securities in a trading account in that they are originated or purchased specifically for resale and are held for short periods of time. Cash receipts and cash payments resulting from acquisitions and sales of loans also shall be classified as operating cash flows if those loans are acquired specifically for resale and are carried at fair value or at the lower of amortized cost basis or fair value. For example, mortgage loans held for sale are required to be reported at the lower of amortized cost basis or fair value in accordance with Topic 948. ##### [230-10-45-21A](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-21A) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:9e4a84a491bf3b8554485257dd5d2ca9c8c6f0e308054d7dc64b3953ea715a88 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cash receipts resulting from the sale of donated [financial assets](https://asc.understandingaccounting.org/glossary/f/#financial-asset "Cash, evidence of an ownership interest in an entity, or a contract that conveys to one entity a right to do either of the following: Receive cash or another financial instrument from a second entity Exchange other financial instruments on potentially favorable terms with the second entity.") (for example, donated debt or equity instruments) or crypto assets accounted for in accordance with Subtopic 350-60by NFPs that upon receipt were directed without any NFP-imposed limitations for sale and were converted nearly immediately into cash shall be classified as operating cash flows. If, however, the donor restricted the use of the contributed resource to a long-term purpose of the nature of those described in paragraph [230-10-45-14(c)](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-14), then those cash receipts meeting all the conditions in this paragraph shall be classified as a financing activity. ##### [230-10-45-21B](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-21B) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:f3ff069fac9c78f944e0cd96b0e12d3deda66b4c02ac97d146990ca0ead2e9a6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cash receipts resulting from the settlement of insurance claims, excluding proceeds received from corporate-owned life insurance policies and bank-owned life insurance policies, shall be classified on the basis of the related insurance coverage (that is, the nature of the loss). For insurance proceeds that are received in a lump-sum settlement, an entity shall determine the classification on the basis of the nature of each loss included in the settlement. ##### [230-10-45-21C](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-21C) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:deea448a8b067220d61177881c9e5d5f8546dbf4356419e45e081b2a2be61f24 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cash receipts resulting from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, shall be classified as cash inflows from investing activities. Cash payments for premiums on corporate-owned life insurance policies, including bank-owned life insurance policies, may be classified as cash outflows for investing activities, operating activities, or a combination of cash outflows for investing and operating activities. ##### [230-10-45-21D](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-21D) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:4cd6f2f130e50e29510caf9efebca3fbf73b055fed19bacb7102a812d0e45254 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When a reporting entity applies the equity method, it shall make an accounting policy election to classify distributions received from equity method investees using either of the following approaches: 1. a Cumulative earnings approach: Distributions received are considered returns on investment and shall be classified as cash inflows from operating activities unless the investor's cumulative distributions received less distributions received in prior periods that were determined to be returns of investment exceed cumulative equity in earnings recognized by the investor (as adjusted for amortization of basis differences). When such an excess occurs, the current-period distribution up to this excess is considered a return of investment and shall be classified as cash inflows from investing activities. 2. b Nature of the distribution approach: Distributions received shall be classified on the basis of the nature of the activity or activities of the investee that generated the distribution as either a return on investment (classified as a cash inflow from operating activities) or a return of investment (classified as a cash inflow from investing activities) when such information is available. If an entity elects to apply the nature of the distribution approach and the information to apply that approach to distributions received from an individual equity method investee is not available to the investor, the entity shall report a change in accounting principle on a retrospective basis by applying the cumulative earnings approach described in (a) above for that investee. In such situations, an entity shall disclose that a change in accounting principle has occurred with respect to the affected investee(s) due to the lack of available information and shall provide the disclosures required in paragraphs [250-10-50-1(b)](https://asc.understandingaccounting.org/asc/250/10/#250-10-50-1) and [250-10-50-2](https://asc.understandingaccounting.org/asc/250/10/#250-10-50-2), as applicable. With either approach described in (a) or (b) above, an entity also shall comply with the applicable accounting policy disclosure requirements in paragraphs [235-10-50-1 through 50-6](https://asc.understandingaccounting.org/asc/235/10/#235-10-50-1) . ##### [230-10-45-22](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-22) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:e61eb5bf68327fc779b670cdc5b98316057032b9bcfcb2c7409b12c14dc05825 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Certain cash receipts and payments may have aspects of more than one class of cash flows. The classification of those cash receipts and payments shall be determined first by applying specific guidance in this Topic and other applicable Topics. In the absence of specific guidance, a reporting entity shall determine each separately identifiable source or each separately identifiable use within the cash receipts and cash payments on the basis of the nature of the underlying cash flows, including when judgment is necessary to estimate the amount of each separately identifiable source or use. A reporting entity shall then classify each separately identifiable source or use within the cash receipts and payments on the basis of their nature in financing, investing, or operating activities. ##### [230-10-45-22A](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-22A) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:c6b34eb7ef6f06a60ef802117c428f6aed1cdd9ebf58fc661feaa14002f84dab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In situations in which cash receipts and payments have aspects of more than one class of cash flows and cannot be separated by source or use (for example, when a piece of equipment is acquired or produced by an entity to be rented to others for a period of time and then sold), the appropriate classification shall depend on the activity that is likely to be the predominant source or use of cash flows for the item. ##### [230-10-45-23](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-23) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:69e1488d370381a9f8cc1c5ff7ac5913d421dc64c358bcebd844a962309dbb24 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Another example where cash receipts and payments include more than one class of cash flows involves a derivative instrument that includes a financing element at inception, other than a financing element inherently included in an at-the-market derivative instrument with no prepayments, because the borrower's cash flows are associated with both the financing element and the derivative instrument. For that derivative instrument, all cash inflows and outflows shall be considered cash flows from financing activities by the borrower. ##### [230-10-45-24](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-24) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:5536e15a38a9aba97d7a5fc5f0e84c2048a71c5fae934646dbb9d43ebac81de2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A statement of cash flows for a period shall report net cash provided or used by operating, investing, and financing activities and the net effect of those flows on the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents during the period. The statement of cash flows shall report that information in a manner that reconciles beginning and ending totals of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. ##### [230-10-45-24A](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-24A) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:2557f4cc4706efdbbbce0bf0eb2214e561afe05057a3e3d07817d32285df22cc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For cash flow disclosures related to a discontinued operation, see paragraph [205-20-50-5B(c)](https://asc.understandingaccounting.org/asc/205/20/#205-20-50-5B). ##### [230-10-45-25](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-25) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:ad69f73118bf6bd59dcdee016868780afdb44e90dc0ab0b56679796acdd37234 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In reporting cash flows from operating activities, entities are encouraged to report major classes of gross cash receipts and gross cash payments and their arithmetic sum—the net cash flow from operating activities (the direct method). (Paragraphs [230-10-55-1 through 55-4](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-1) and paragraph [230-10-55-21](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-21), respectively, discuss and illustrate a method by which those major classes of gross operating cash receipts and payments generally may be determined indirectly.) Entities that do so shall, at a minimum, separately report the following classes of operating cash receipts and payments: 1. a Cash collected from customers, including lessees, licensees, and the like 2. b Interest and dividends received. Interest and dividends that are donor restricted for long-term purposes as included in the list of [financing activities](https://asc.understandingaccounting.org/glossary/f/#financing-activities "Financing activities include obtaining resources from owners and providing them with a return on, and a return of, their investment; receiving restricted resources that by donor stipulation must be used for long-term purposes; borrowing money and repaying amounts borrowed, or otherwise settling the obligation; and obtaining and paying for other resources obtained from creditors on long-term credit.") and paragraph [230-10-45-14(c)](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-14) are not part of operating cash receipts. 3. c Other operating cash receipts, if any 4. d Cash paid to employees and other suppliers of goods or services, including suppliers of insurance, advertising, and the like 5. e Interest paid, including the portion of the payments made to settle zero-coupon debt instruments that is attributable to accreted interest related to the debt discount or the portion of the payments made to settle other debt instruments with coupon interest rates that are insignificant in relation to the [effective interest rate](https://asc.understandingaccounting.org/glossary/e/#effective-interest-rate "The rate of return implicit in the financial asset, that is, the contractual interest rate adjusted for any net deferred fees or costs, premium, or discount existing at the origination or acquisition of the financial asset. For purchased financial assets with credit deterioration, however, to decouple interest income from credit loss recognition, the premium or discount at acquisition excludes the discount embedded in the purchase price that is attributable to the acquirer's assessment of credit losses at the date of acquisition.") of the borrowing that is attributable to accreted interest related to the debt discount 6. f Income taxes paid 7. g Other operating cash payments, if any. Entities are encouraged to provide further breakdowns of operating cash receipts and payments that they consider meaningful and feasible. For example, a retailer or manufacturer might decide to further divide cash paid to employees and suppliers (category (d) in the preceding paragraph) into payments for costs of inventory and payments for selling, general, and administrative expenses. ##### [230-10-45-26](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-26) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:20993df9557577951f2ae6bf2af2569792a4a305372a3e26b803c59dec1a05b0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Except for items described in paragraphs [230-10-45-8 through 45-9](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-8) , both investing cash inflows and outflows and financing cash inflows and outflows shall be reported separately in a statement of cash flows—for example, outlays for acquisitions of property, plant, and equipment shall be reported separately from proceeds from sales of property, plant, and equipment; proceeds of borrowings shall be reported separately from repayments of debt; and proceeds from issuing stock shall be reported separately from outlays to reacquire the entity's stock. ##### [230-10-45-27](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-27) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:3d740b9441e72c27e709027711abd2a8eca11f9bb5c68c2c7c692538d0fdfd5c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Generally, each cash receipt or payment is to be classified according to its nature without regard to whether it stems from an item intended as a hedge of another item. For example, the proceeds of a borrowing are a financing cash inflow even though the debt is intended as a hedge of an investment, and the purchase or sale of a futures contract is an investing activity even though the contract is intended as a hedge of a firm commitment to purchase inventory. However, cash flows from a derivative instrument that is accounted for as a fair value hedge or cash flow hedge may be classified in the same category as the cash flows from the items being hedged provided that the derivative instrument does not include an other-than-insignificant financing element at inception, other than a financing element inherently included in an at-the-market derivative instrument with no prepayments (that is, the forward points in an at-the-money forward contract) and that the accounting policy is disclosed. If the derivative instrument includes an other-than-insignificant financing element at inception, all cash inflows and outflows of the derivative instrument shall be considered cash flows from financing activities by the borrower. If for any reason hedge accounting for an instrument that hedges an identifiable transaction or event is discontinued, then any cash flows after the date of discontinuance shall be classified consistent with the nature of the instrument. ##### [230-10-45-27A](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-27A) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:5a8c643a3fe25b8df538a1cdbef447a96c396bf36d0f642dfa3c956d47e02a69 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If crypto assets accounted for in accordance with Subtopic 350-60 are received as noncash consideration in the ordinary course of business (for example, in exchange for goods and services transferred to a customer) and converted nearly immediately into cash, the cash received shall be classified as operating activities. In this context, the term _nearly immediately_ refers to a short period of time that is expected to be within hours or a few days, rather than weeks. #### Reconciliation of Net Income and Net Cash Flow from Operating Activities ##### [230-10-45-28](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-28) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:0ba7717e07dab5cbab8dfe523b20e4e44d8fcf07a925486a2ae6268eb5fc35b1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entities that choose not to provide information about major classes of operating cash receipts and payments by the direct method as encouraged in paragraph [230-10-45-25](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-25) shall determine and report the same amount for net cash flow from operating activities indirectly by adjusting net income of a business entity or change in net assets of a not-for-profit entity (NFP) to reconcile it to net cash flow from operating activities (the indirect or reconciliation method). That requires adjusting net income of a business entity or change in net assets of an NFP to remove both of the following: 1. a The effects of all deferrals of past operating cash receipts and payments, such as changes during the period in inventory, deferred income, and the like, and all accruals of expected future operating cash receipts and payments, such as changes during the period in receivables and payables. Adjustments to net income of a business entity or change in net assets of an NFP to determine net cash flow from operating activities shall reflect accruals for interest earned but not received and interest incurred but not paid. Those accruals may be reflected in the statement of financial position in changes in assets and liabilities that relate to investing or financing activities, such as loans or deposits. However, interest credited directly to a deposit account that has the general characteristics of [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.") is a cash outflow of the payor and a cash inflow of the payee when the entry is made. 2. b All items that are included in net income of a business entity or change in net assets of an NFP that do not affect net cash provided from, or used for, operating activities such as depreciation of property, plant, and equipment and amortization of finite-life intangible assets. This includes all items whose cash effects are related to investing or financing cash flows, such as gains or losses on sales of property, plant, and equipment and discontinued operations (which relate to investing activities), and gains or losses on extinguishment of debt (which relate to financing activities). ##### [230-10-45-29](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-29) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:c086dff6b1a7cf0d410e651432569c6c2fccedc396624d0644637785fd62c342 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The reconciliation of net income of a business entity to net cash flow from operating activities described in paragraph [230-10-45-28](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-28) shall be provided regardless of whether the direct or indirect method of reporting net cash flow from operating activities is used. However, NFPs that use the direct method of reporting net cash flows from operations are not required to provide a reconciliation of change in net assets to net cash flow from operating activities. Additional guidance for NFPs is found in Subtopic 958-230. The reconciliation shall separately report all major classes of reconciling items. For example, major classes of deferrals of past operating cash receipts and payments and accruals of expected future operating cash receipts and payments, including, at a minimum, changes during the period in receivables pertaining to operating activities, in inventory, and in payables pertaining to operating activities, shall be separately reported. Entities are encouraged to provide further breakdowns of those categories that they consider meaningful. For example, changes in receivables from customers for an entity's sale of goods or services might be reported separately from changes in other operating receivables. ##### [230-10-45-30](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-30) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:84bc306d98c94c28fca522d3c7536e8ab5d7452f3184b2692faefd85dadc1282 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an entity other than an NFP uses the direct method of reporting net cash flow from operating activities, the reconciliation of net income to net cash flow from operating activities shall be provided in a separate schedule. ##### [230-10-45-31](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-31) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:6f6479af82f1316df8e187acecb973ba38c5f228b1ed3630cb6444961e170f26 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the indirect method is used, the reconciliation may be either reported within the statement of cash flows or provided in a separate schedule, with the statement of cash flows reporting only the net cash flow from operating activities. ##### [230-10-45-32](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-32) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:33.323Z to 2026-09-09T23:11:33.323Z Record version: sha256:6bebdb233ad669055ded501eb4f089c9baee2ab4f760f3824932b2893a76b306 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the reconciliation is presented in the statement of cash flows, all adjustments to net income of a business entity or change in net assets of an NFP to determine net cash flow from operating activities shall be clearly identified as reconciling items. Source downloaded (UTC): 2026-09-09T23:11:36.099Z to 2026-09-09T23:11:36.099Z Record version: sha256:e49e7c48cbc79ecc024ef5ba2c3204d986008c2e07d053c05fc59d6ff4ebb371 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-10-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/230/10/#50-disclosure) SEC content: no #### Cash Equivalents Policy ##### [230-10-50-1](https://asc.understandingaccounting.org/asc/230/10/#230-10-50-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:36.099Z to 2026-09-09T23:11:36.099Z Record version: sha256:bedc913f4c7bc96dd559150592dfba4b38678c72c1d67c3649549a26374a675e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall disclose its policy for determining which items are treated as [cash equivalents](https://asc.understandingaccounting.org/glossary/c/#cash-equivalents "Cash equivalents are short-term, highly liquid investments that have both of the following characteristics: Readily convertible to known amounts of cash So near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less qualify under that definition. Original maturity means original maturity to the entity holding the investment. For example, both a three-month U.S. Treasury bill and a three-year U.S. Treasury note purchased three months from maturity qualify as cash equivalents. However, a Treasury note purchased three years ago does not become a cash equivalent when its remaining maturity is three months. Examples of items commonly considered to be cash equivalents are Treasury bills, commercial paper, money market funds, and federal funds sold (for an entity with banking operations)."). Any change to that policy is a change in accounting principle that shall be effected by restating financial statements for earlier years presented for comparative purposes. #### Interest and Income Taxes Paid ##### [230-10-50-2](https://asc.understandingaccounting.org/asc/230/10/#230-10-50-2) Pending content: yes Source downloaded (UTC): 2026-09-09T23:11:36.099Z to 2026-09-09T23:11:36.099Z Record version: sha256:f7b339b19623e59a46a9c0ebe75095463213e9cc6e760cba57a7d59349094337 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the indirect method is used, amounts of interest paid (net of amounts capitalized), including the portion of the payments made to settle zero-coupon debt instruments that is attributable to accreted interest related to the debt discount or the portion of the payments made to settle other debt instruments with coupon interest rates that are insignificant in relation to the [effective interest rate](https://asc.understandingaccounting.org/glossary/e/#effective-interest-rate "The rate of return implicit in the financial asset, that is, the contractual interest rate adjusted for any net deferred fees or costs, premium, or discount existing at the origination or acquisition of the financial asset. For purchased financial assets with credit deterioration, however, to decouple interest income from credit loss recognition, the premium or discount at acquisition excludes the discount embedded in the purchase price that is attributable to the acquirer's assessment of credit losses at the date of acquisition.") of the borrowing that is attributable to accreted interest related to the debt discount, and income taxes paid during the period shall be disclosed. Transition date:(P) December 16, 2024; (N) December 16, 2025Transition guidance: [740-10-65-9](https://asc.understandingaccounting.org/asc/740/10/#740-10-65-9) If the indirect method is used, amounts of interest paid (net of amounts capitalized), including the portion of the payments made to settle zero-coupon debt instruments that is attributable to accreted interest related to the debt discount or the portion of the payments made to settle other debt instruments with coupon interest rates that are insignificant in relation to the [effective interest rate](https://asc.understandingaccounting.org/glossary/e/#effective-interest-rate "The rate of return implicit in the financial asset, that is, the contractual interest rate adjusted for any net deferred fees or costs, premium, or discount existing at the origination or acquisition of the financial asset. For purchased financial assets with credit deterioration, however, to decouple interest income from credit loss recognition, the premium or discount at acquisition excludes the discount embedded in the purchase price that is attributable to the acquirer's assessment of credit losses at the date of acquisition.") of the borrowing that is attributable to accreted interest related to the debt discount, shall be disclosed. ##### [230-10-50-2A](https://asc.understandingaccounting.org/asc/230/10/#230-10-50-2A) Pending content: yes Source downloaded (UTC): 2026-09-09T23:11:36.099Z to 2026-09-09T23:11:36.099Z Record version: sha256:b3776f415eace74c1a09bfe6f431ea4c0b2270fbb61ca9d37f45e47781e2d66b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2024; (N) December 16, 2025Transition guidance: [740-10-65-9](https://asc.understandingaccounting.org/asc/740/10/#740-10-65-9) Income taxes paid (net of refunds received) shall be disclosed in accordance with paragraphs [740-10-50-22 through 50-23](https://asc.understandingaccounting.org/asc/740/10/#740-10-50-22) . #### Noncash Investing and Financing Activities ##### [230-10-50-3](https://asc.understandingaccounting.org/asc/230/10/#230-10-50-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:36.099Z to 2026-09-09T23:11:36.099Z Record version: sha256:ca48965d05e98cacfe702585cb12772345fb78ff73e1e29d951f5a8de90ab332 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Information about all [investing](https://asc.understandingaccounting.org/glossary/i/#investing-activities "Investing activities include making and collecting loans and acquiring and disposing of debt or equity instruments and property, plant, and equipment and other productive assets, that is, assets held for or used in the production of goods or services by the entity (other than materials that are part of the entity's inventory). Investing activities exclude acquiring and disposing of certain loans or other debt or equity instruments that are acquired specifically for resale, as discussed in paragraphs 230-10-45-12 and 230-10-45-21.") and [financing activities](https://asc.understandingaccounting.org/glossary/f/#financing-activities "Financing activities include obtaining resources from owners and providing them with a return on, and a return of, their investment; receiving restricted resources that by donor stipulation must be used for long-term purposes; borrowing money and repaying amounts borrowed, or otherwise settling the obligation; and obtaining and paying for other resources obtained from creditors on long-term credit.") of an entity during a period that affect recognized assets or liabilities but that do not result in [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.") receipts or cash payments in the period shall be disclosed. Those disclosures may be either narrative or summarized in a schedule, and they shall clearly relate the cash and noncash aspects of transactions involving similar items. ##### [230-10-50-4](https://asc.understandingaccounting.org/asc/230/10/#230-10-50-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:36.099Z to 2026-09-09T23:11:36.099Z Record version: sha256:bcc82c16793bf71f2f718fd790b07f514c53f17cb5d025bba243e4e89159ddc4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples of noncash investing and financing transactions are converting debt to equity; acquiring assets by assuming directly related liabilities, such as purchasing a building by incurring a mortgage to the seller; obtaining a [right-of-use asset](https://asc.understandingaccounting.org/glossary/r/#right-of-use-asset "An asset that represents a lessee's right to use an underlying asset for the lease term.") in exchange for a [lease liability](https://asc.understandingaccounting.org/glossary/l/#lease-liability "A lessee's obligation to make the lease payments arising from a lease, measured on a discounted basis."); obtaining a beneficial interest as consideration for transferring financial assets (excluding cash), including the transferor's trade receivables, in a securitization transaction; obtaining a building or investment asset by receiving a gift; and exchanging noncash assets or liabilities for other noncash assets or liabilities. ##### [230-10-50-5](https://asc.understandingaccounting.org/asc/230/10/#230-10-50-5) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:36.099Z to 2026-09-09T23:11:36.099Z Record version: sha256:1e9b16590e6362648bc3f6d9290deb6863c903c6294cacb2b21e75a3b38d74c5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some transactions are part cash and part noncash; only the cash portion shall be reported in the statement of cash flows. ##### [230-10-50-6](https://asc.understandingaccounting.org/asc/230/10/#230-10-50-6) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:36.099Z to 2026-09-09T23:11:36.099Z Record version: sha256:b749012499c6ff4ff9e05b80216507e6cfcc4b95b4734e0d2010028d1a745a83 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If there are only a few such noncash transactions, it may be convenient to include them on the same page as the statement of cash flows. Otherwise, the transactions may be reported elsewhere in the financial statements, clearly referenced to the statement of cash flows. #### Restrictions on Cash and Cash Equivalents ##### [230-10-50-7](https://asc.understandingaccounting.org/asc/230/10/#230-10-50-7) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:36.099Z to 2026-09-09T23:11:36.099Z Record version: sha256:2d62b8b8fe0e4b2912b3c8ee9f3fa4b5bd0b43e412cfe46bcd618c2281dfe742 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall disclose information about the nature of restrictions on its cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. An entity within the scope of Topic 958 on not-for-profit entities also shall provide the disclosures required in paragraph [958-210-50-3](https://asc.understandingaccounting.org/asc/210/958/#210-958-50-3) (see paragraphs [230-10-55-12A](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-12A) and [230-10-55-18A](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-18A)). ##### [230-10-50-8](https://asc.understandingaccounting.org/asc/230/10/#230-10-50-8) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:36.099Z to 2026-09-09T23:11:36.099Z Record version: sha256:61441390b66e229f784885d0195e3bdf444f20530bad4d3f90a5a2ceeecfd984 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents are presented in more than one line item within the statement of financial position, an entity shall, for each period that a statement of financial position is presented, present on the face of the statement of cash flows or disclose in the notes to the financial statements, the line items and amounts of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents reported within the statement of financial position. The amounts, disaggregated by the line item in which they appear within the statement of financial position, shall sum to the total amount of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents at the end of the corresponding period shown in the statement of cash flows. This disclosure may be provided in either a narrative or a tabular format (see paragraphs [230-10-55-12A](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-12A) and [230-10-55-18A](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-18A)). #### Accounting Policy for Derivative Instruments ##### [230-10-50-9](https://asc.understandingaccounting.org/asc/230/10/#230-10-50-9) Pending content: yes Source downloaded (UTC): 2026-09-09T23:11:36.099Z to 2026-09-09T23:11:36.099Z Record version: sha256:87ba8cefc04f2d4772f62430c56066e1075268b9c262098d1c80e21256d3526b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) June 30, 2027; (N) June 30, 2027Transition guidance: [105-10-65-7](https://asc.understandingaccounting.org/asc/105/10/#105-10-65-7) An entity shall disclose its accounting policy for where cash flows associated with derivative instruments and their related gains and losses are presented. Source downloaded (UTC): 2026-09-09T23:11:40.068Z to 2026-09-09T23:11:40.068Z Record version: sha256:74ed1364e90babbc2cf0d9fac1a8d1dea54e49945e766f54945178e8e6ddbcd8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-10-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/230/10/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [230-10-55-1](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:40.068Z to 2026-09-09T23:11:40.068Z Record version: sha256:6a551b38f3b85dd63a755df9720466d90b48044ed5b9254df339d24c74e3915c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Given sufficiently detailed information, major classes of operating [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.") receipts and payments may be determined indirectly by adjusting revenue and expense amounts for the change during the period in related asset and liability accounts. For example, cash collected from customers may be determined indirectly by adjusting sales for the change during the period in receivables from customers for the entity's delivery of goods or services. Likewise, cash paid to suppliers and employees may be determined indirectly by adjusting cost of sales and expenses (exclusive of depreciation, interest, and income taxes) for the change during the period in inventories and payables for operating items. That procedure, of course, requires the availability of information concerning the change during the period in the appropriate classes of receivables and payables. The more detailed the categories of operating cash receipts and payments to be reported, the more complex the procedure for determining them. For the resulting operating cash receipts and payments to be accurate, the effects of all noncash entries to accounts receivable and payable, inventory, and other balance sheets accounts used in the calculation shall be eliminated. For example, the change in accounts receivable would have to be determined exclusive of any bad debt write-offs and other noncash charges and credits to customer accounts during the period. ##### [230-10-55-2](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:40.068Z to 2026-09-09T23:11:40.068Z Record version: sha256:37dc7fbe9e81399241ac9fe7b525fc4e12fe6eac9baba7181482d95bfc0fd149 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Amounts of operating cash receipts and payments at the minimum level of detail specified in paragraph [230-10-45-25](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-25) often may be determined indirectly without incurring unduly burdensome costs over those involved in appropriately applying the indirect method. For example, determining net cash flow from [operating activities](https://asc.understandingaccounting.org/glossary/o/#operating-activities "Operating activities include all transactions and other events that are not defined as investing or financing activities (see paragraphs 230-10-45-12230-10-45-13230-10-45-14230-10-45-15). Operating activities generally involve producing and delivering goods and providing services. Cash flows from operating activities are generally the cash effects of transactions and other events that enter into the determination of net income.") by the indirect method requires the availability of the total amount of operating receivables. That is, any receivables for investing or financing items shall be segregated. Within the total amount of operating receivables, information on receivables from customers for an entity's delivery of goods or services may well be available separately from those for interest and dividends. Thus, it may be possible to determine indirectly cash collected from customers and interest and dividends received using much the same information needed to determine net cash flow from operating activities using the indirect method. ##### [230-10-55-3](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:40.068Z to 2026-09-09T23:11:40.068Z Record version: sha256:92036935cee1788f4a6d151faea23bf6466243dcf9a3b24532c8023b333f747a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The same procedure may be used to determine cash paid to suppliers and employees. Determining net cash flow from operating activities by the direct method requires the availability of the total amount of payables pertaining to operating activities. Within that amount, payables to suppliers and employees may well be available separately from those for interest and taxes. However, determining operating cash payments in more detail than the minimum specified in paragraph [230-10-45-25](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-25) might involve significant incremental costs over those already required to apply the indirect method because information on subcategories of payables to suppliers and employees may not be available. ##### [230-10-55-4](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:40.068Z to 2026-09-09T23:11:40.068Z Record version: sha256:4890b634504f22e1d01f07c86a83867f4720336281c7d589ff07e4e96c0844cb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Many entities may well be able to determine amounts of operating cash receipts and payments at the minimum level of detail that this Subtopic encourages (see paragraph [230-10-45-25](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-25)) indirectly at reasonable cost by the procedure discussed in paragraphs [230-10-55-1 through 55-3](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-1) . But few, if any, entities have experimented with the procedure, and the degree of difficulty encountered in applying it undoubtedly would vary depending on the nature of an entity's operations and the features of its current accounting system. #### Illustrations ##### [230-10-55-5](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-5) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:40.068Z to 2026-09-09T23:11:40.068Z Record version: sha256:67bb0ac12cd57ac9b55148c6174e66ccf9c59d52d1e4643f1b8fd769a11019e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Examples below provide illustrations for the preparation of statements of cash flows of business entities. ##### [230-10-55-6](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-6) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:40.068Z to 2026-09-09T23:11:40.068Z Record version: sha256:33f35c24aac92f49758b11306012939180d87e4d35b99da6edc21b904d120b0b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Section 958-205-55 provides illustrations for the preparation of statements of cash flows for a not-for-profit entity (NFP). ##### [230-10-55-7](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-7) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:40.068Z to 2026-09-09T23:11:40.068Z Record version: sha256:44660e0b94c400595a2ce463b55836fa9fbbebe798b67085466ce76075a247cc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates a statement of cash flows under both the direct method and the indirect method for a domestic manufacturing entity. ##### [230-10-55-8](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-8) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:40.068Z to 2026-09-09T23:11:40.068Z Record version: sha256:473259483784be1a0d6f8a7a415eca398260b46b0993757701ffafd74563bc30 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The illustrations 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. ##### [230-10-55-9](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-9) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:40.068Z to 2026-09-09T23:11:40.068Z Record version: sha256:1cb76059d2ba3def80cd829e0c272e34e8ffb0ea46fc91162e2c39e6ac3fb93f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Other formats or levels of detail may be appropriate for particular circumstances. ##### [230-10-55-10](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-10) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:40.068Z to 2026-09-09T23:11:40.068Z Record version: sha256:d6e0da82ecd995f4715dd060ebdfdc00276ad0038b3e7e41c6c6cea6bcd69d07 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is a statement of cash flows for the year ended December 31, 19X1, for Entity A, a U.S. corporation engaged principally in manufacturing activities. 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-638931E4-C4B4-4B84-88DF-7770554AC579-low.gif) Entity A Consolidated Statement of Cash Flows "For the Year Ended December 31, 19X1" Cash flows from operating activities: Cash received from customers " $13,850 " Cash paid to suppliers and employees " (12,000)" Dividend received from affiliate 20 Interest received 55 Interest paid (net of amount capitalized) (220) Income taxes paid (325) Insurance proceeds received for business interruption 5 Cash paid to settle lawsuit for patent infringement (30) Net cash provided by operating activities "$1,355" Cash flows from investing activities: Proceeds from sale of facility 600 Payment received on note for sale of plant 150 Insurance proceeds received for damage to equipment 10 Capital expenditures " (1,000)" "Payment for purchase of Entity B, net of cash acquired" (925) Net cash used in investing activities "(1,165)" Cash flows from financing activities: Net borrowings under line-of-credit agreement 300 Principal payments under finance lease obligation (125) Proceeds from issuance of long-term debt 400 Proceeds from issuance of common stock 500 Dividends paid (200) Net cash provided by financing activities 875 "Net increase in cash, cash equivalents, and restricted cash" " 1,065 " "Cash, cash equivalents, and restricted cash at beginning of year" 600 "Cash, cash equivalents, and restricted cash at end of year" " $1,665 " Reconciliation of net income to net cash provided by operating activities: Net income $760 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization $445 Provision for losses on accounts receivable 200 Gain on sale of facility (80) Undistributed earnings of affiliate (25) Payment received on installment note receivable for sale of inventory 100 Gain on insurance proceeds received for damage to equipment (10) Change in assets and liabilities net of effects from purchase of Entity B: Increase in accounts receivable (215) Decrease in inventory 205 Increase in prepaid expenses (25) Decrease in accounts payable and accrued expenses (250) Increase in interest and income taxes payable 50 Increase in deferred taxes 150 Increase in other liabilities 50 Total adjustments 595 Net cash provided by operating activities "$1,355" ##### [230-10-55-11](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-11) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:40.068Z to 2026-09-09T23:11:40.068Z Record version: sha256:d7bd8793f1aff6f6d5269a22317288cdf547e0a45d2b87fff11506fc080600db Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The supplemental schedule of noncash [investing](https://asc.understandingaccounting.org/glossary/i/#investing-activities "Investing activities include making and collecting loans and acquiring and disposing of debt or equity instruments and property, plant, and equipment and other productive assets, that is, assets held for or used in the production of goods or services by the entity (other than materials that are part of the entity's inventory). Investing activities exclude acquiring and disposing of certain loans or other debt or equity instruments that are acquired specifically for resale, as discussed in paragraphs 230-10-45-12 and 230-10-45-21.") and [financing activities](https://asc.understandingaccounting.org/glossary/f/#financing-activities "Financing activities include obtaining resources from owners and providing them with a return on, and a return of, their investment; receiving restricted resources that by donor stipulation must be used for long-term purposes; borrowing money and repaying amounts borrowed, or otherwise settling the obligation; and obtaining and paying for other resources obtained from creditors on long-term credit.") is as follows. - Entity A purchased all of the capital stock of Entity B for $950. In conjunction with the acquisition, liabilities were assumed as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-820292CE-7F15-49A5-A491-22001388443E-low.gif) Fair value of assets acquired " $1,580 " Cash paid for the capital stock (950) Liabilities assumed $630 - A finance lease obligation of $850 was incurred when Entity A entered into a lease for new equipment. - Additional common stock was issued upon the conversion of $500 of long-term debt. ##### [230-10-55-12](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-12) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:40.068Z to 2026-09-09T23:11:40.068Z Record version: sha256:3b68ff6b93bcfe740a52b1f485217c9823a9217334ed821fecb9440134d655c9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The disclosure of accounting policy is as follows. - For purposes of the statement of cash flows, the entity considers all highly liquid debt instruments purchased with a maturity of three months or less to be [cash equivalents](https://asc.understandingaccounting.org/glossary/c/#cash-equivalents "Cash equivalents are short-term, highly liquid investments that have both of the following characteristics: Readily convertible to known amounts of cash So near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less qualify under that definition. Original maturity means original maturity to the entity holding the investment. For example, both a three-month U.S. Treasury bill and a three-year U.S. Treasury note purchased three months from maturity qualify as cash equivalents. However, a Treasury note purchased three years ago does not become a cash equivalent when its remaining maturity is three months. Examples of items commonly considered to be cash equivalents are Treasury bills, commercial paper, money market funds, and federal funds sold (for an entity with banking operations)."). ##### [230-10-55-12A](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-12A) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:40.068Z to 2026-09-09T23:11:40.068Z Record version: sha256:36a825d38fcd2e51a96ce7ce8cb8398ec12f7d3e1cfeac581cf7280741dc4a74 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Shown below is an illustrative disclosure of the nature of restrictions on cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents required by paragraph [230-10-50-7](https://asc.understandingaccounting.org/asc/230/10/#230-10-50-7), as well as an illustrative disclosure of the line items and amounts of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents reported within the statement of financial position that sum to the total of the same such amounts at the end of the period shown in the statement of cash flows as required by paragraph [230-10-50-8](https://asc.understandingaccounting.org/asc/230/10/#230-10-50-8) (in this illustrative example, assume Entity A has no restricted cash equivalents). Comparative statements of financial position are provided in the illustrative example in paragraph [230-10-55-19](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-19) only to facilitate understanding of the statement of cash flows. For purposes of applying paragraphs [230-10-50-7 through 50-8](https://asc.understandingaccounting.org/asc/230/10/#230-10-50-7) to this illustrative example, assume that the year ended December 31, 19X1, is the only period for which a statement of financial position is presented. - The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position that sum to the total of the same such amounts shown in the statement of cash flows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-9F292DFC-41E4-41EF-8AFD-ADE34B1BD0BE-low.gif) 12/31/19X1 Cash and cash equivalents " $1,465 " Restricted cash 125 Restricted cash included in other long-term assets 75 "Total cash, cash equivalents, and restricted cash shown in the statement of cash flows" " $1,665 " - Amounts included in restricted cash represent those required to be set aside by a contractual agreement with an insurer for the payment of specific workers' compensation claims. Restricted cash included in other long-term assets on the statement of financial position represents amounts pledged as collateral for long-term financing arrangements as contractually required by a lender. The restriction will lapse when the related long-term debt is paid off. ##### [230-10-55-13](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-13) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:40.068Z to 2026-09-09T23:11:40.068Z Record version: sha256:cce08420e00ddd13ef8465a9368c2f1f664374bfe2cf334e91417efb5e2ce897 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is Entity A's statement of cash flows for the year ended December 31, 19X1, prepared using the indirect method, as described in paragraph [230-10-45-28](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-28). - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-1AC4885B-C7D2-4AC3-A887-F390C103549C-low.gif) Entity A Consolidated Statement of Cash Flows "For the Year Ended December 31, 19X1" Cash flows from operating activities: Net income $760 Depreciation and amortization $445 Provision for losses on accounts receivable 200 Gain on sale of facility (80) Undistributed earnings of affiliate (25) Payment received on installment note receivable for sale of inventory 100 Gain on insurance proceeds received for damage to equipment (10) Change in assets and liabilities net of effects from purchase of Entity B: Increase in accounts receivable (215) Decrease in inventory 205 Increase in prepaid expenses (25) Decrease in accounts payable and accrued expenses (250) Increase in interest and income taxes payable 50 Increase in deferred taxes 150 Increase in other liabilities 50 Total adjustments 595 Net cash provided by operating activities "1,355" Cash flows from investing activities: Proceeds from sale of facility 600 Payment received on note for sale of plant 150 Insurance proceeds received for damage to equipment 10 Capital expenditures " (1,000)" "Payment for purchase of Entity B, net of cash acquired" (925) Net cash used in investing activities "(1,165)" Cash flows from financing activities: Net borrowings under line-of-credit agreement 300 Principal payments under finance lease obligation (125) Proceeds from issuance of long-term debt 400 Proceeds from issuance of common stock 500 Dividends paid (200) Net cash provided by financing activities 875 "Net increase in cash, cash equivalents, and restricted cash" " 1,065 " "Cash, cash equivalents, and restricted cash at beginning of year" 600 "Cash, cash equivalents, and restricted cash at end of year" " $1,665 " ##### [230-10-55-14](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-14) Pending content: yes Source downloaded (UTC): 2026-09-09T23:11:40.068Z to 2026-09-09T23:11:40.068Z Record version: sha256:db9af7f7527eb9b02742551ee7817df350bd00bc9b688c85baa7875212b1f322 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table illustrates the supplemental disclosures of cash flow information. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-7A4FFADE-4DC7-4921-B4DC-02E16426C192-low.gif) Cash paid during the year for: Interest (net of amount capitalized) $220 Income taxes 325 Transition date:(P) December 16, 2024; (N) December 16, 2025Transition guidance: [740-10-65-9](https://asc.understandingaccounting.org/asc/740/10/#740-10-65-9) The following table illustrates the supplemental disclosures of cash flow information. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-7A4FFADE-4DC7-4921-B4DC-02E16426C192-low.gif) Cash paid during the year for: Interest (net of amount capitalized) $220 Income taxes 325 **Note:** This Example does not illustrate the disclosures of income taxes paid required by paragraphs [740-10-50-22 through 50-23](https://asc.understandingaccounting.org/asc/740/10/#740-10-50-22) , for the year ended December 31, 19X1. ##### [230-10-55-15](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-15) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:40.068Z to 2026-09-09T23:11:40.068Z Record version: sha256:04e73e014c27005b97a07089cf3194c4a2bfb083c54fd81462dfc9c0dfaf2d49 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The supplemental schedule of noncash investing and financing activities is as follows. - Entity A purchased all of the capital stock of Entity B for $950. In conjunction with the acquisition, liabilities were assumed as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-EE7AD6BE-19BC-423F-83D6-76B1037807A7-low.gif) Fair value of assets acquired " $1,580 " Cash paid for the capital stock (950) Liabilities assumed $630 - A finance lease obligation of $850 was incurred when Entity A entered into a lease for new equipment. - Additional common stock was issued upon the conversion of $500 of long-term debt. ##### [230-10-55-16](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-16) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:40.068Z to 2026-09-09T23:11:40.068Z Record version: sha256:e2f0cb78f7b05b562a70ea98359a40ca89706e1dec4a9931781819337cf453a3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [230-10-55-17](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-17) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:40.068Z to 2026-09-09T23:11:40.068Z Record version: sha256:85d5cf9e9a9810503671156b74ad1a028c348de3689f89903de2dc328aee60de Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [230-10-55-18](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-18) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:40.068Z to 2026-09-09T23:11:40.068Z Record version: sha256:bcf2b81df32e0f810550746b83a544a9f3dfd5e352ce778442fb63b4a89be82f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The disclosure of accounting policy is as follows. - For purposes of the statement of cash flows, the Entity considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. ##### [230-10-55-18A](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-18A) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:40.068Z to 2026-09-09T23:11:40.068Z Record version: sha256:e422528d3fb2d1a2d7bc4fd3eba296c55f81a3015ae35a6dc580b9ce95d06daa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Shown below is an illustrative disclosure of the nature of restrictions on cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents required by paragraph [230-10-50-7](https://asc.understandingaccounting.org/asc/230/10/#230-10-50-7), as well as an illustrative disclosure of the line items and amounts of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents reported within the statement of financial position that sum to the total of the same such amounts at the end of the period shown in the statement of cash flows as required by paragraph [230-10-50-8](https://asc.understandingaccounting.org/asc/230/10/#230-10-50-8) (in this illustrative example, assume Entity A has no restricted cash equivalents). Comparative statements of financial position are provided in the illustrative example in paragraph [230-10-55-19](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-19) only to facilitate understanding of the statement of cash flows. For purposes of applying paragraphs [230-10-50-7 through 50-8](https://asc.understandingaccounting.org/asc/230/10/#230-10-50-7) to this illustrative example, assume that the year ended December 31, 19X1, is the only period for which a statement of financial position is presented. - The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position that sum to the total of the same such amounts shown in the statement of cash flows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-4F2AF9E5-975C-4E03-95F7-195ED087892B-low.gif) 12/31/19X1 Cash and cash equivalents " $1,465 " Restricted cash 125 Restricted cash included in other long-term assets 75 "Total cash, cash equivalents, and restricted cash shown in the statement of cash flows" " $1,665 " - Amounts included in restricted cash represent those required to be set aside by a contractual agreement with an insurer for the payment of specific workers' compensation claims. Restricted cash included in other long-term assets on the statement of financial position represents amounts pledged as collateral for long-term financing arrangements as contractually required by a lender. The restriction will lapse when the related long-term debt is paid off. ##### [230-10-55-19](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-19) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:40.068Z to 2026-09-09T23:11:40.068Z Record version: sha256:514bb1f26e5395fc5fa3713fd09a15f13f38e02739a5fa387e4eb89367eb5373 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following summarizes financial information for the current year for Entity A, which provides the basis for the statements of cash flows presented in paragraphs [230-10-55-10 through 55-18A](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-10). - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-757F8D00-64A3-4889-9AC7-E2B9FDB8A02C-low.gif) Entity A Consolidated Statement of Financial Position 1/1/X1 12/31/X1 Change Assets: Cash and cash equivalents $ 300 "$ 1,465" "$ 1,165" Restricted cash 225 125 (100) Accounts receivable (net of allowance for losses of $600 and $450) "1,770" "1,940" 170 Notes receivable 400 150 (250) Inventory "1,230" "1,375" 145 Prepaid expenses 110 135 25 Total current assets "4,035" "5,190" "1,155" Investments 250 275 25 "Property, plant, and equipment, at cost" "6,460" "8,460" "2,000" Accumulated depreciation "(2,100)" "(2,300)" (200) "Property, plant, and equipment, net" "4,360" "6,160" "1,800" Intangible assets 40 175 135 Other long-term assets 430 430 - Total noncurrent assets 5080 "7,040" "1,960" Total assets "$ 9,115" "$ 12,230" "$ 3,115" Liabilities: Accounts payable and accrued expenses "$ 1,085" "$ 1,090" $ 5 Interest payable 30 45 15 Income taxes payable 50 85 35 Short-term debt 450 750 300 Current portion of finance lease obligation - 125 125 Total current liabilities "1,615" "2,095" 480 Finance lease obligation - 600 600 Long-term debt "2,150" "2,425" 275 Deferred taxes 375 525 150 Other liabilities 225 275 50 Total noncurrent liabilities "2,750" "3,825" "1,075" Total liabilities "4,365" "5,920" "1,555" Stockholders' equity: Capital stock "2,000" "3,000" "1,000" Retained earnings "2,750" "3,310" 560 Total stockholders' equity "4,750" "6,310" "1,560" Total liabilities and stockholders' equity "$ 9,115" "$ 12,230" "$ 3,115" Entity A Consolidated Statement of Income "For the Year Ended December 31, 19X1" Sales " $13,965 " Cost of sales " (10,290)" Depreciation and amortization (445) "Selling, general, and administrative expenses" " (1,890)" Interest expense (235) Equity in earnings of affiliate 45 Gain on sale of facility 80 Interest income 55 Insurance proceeds 15 Loss from patent infringement lawsuit (30) Income before income taxes " 1,270 " Provision for income taxes (510) Net income $760 - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-84229CBD-5EE7-42E4-A460-9680EBC6B63D-low.gif) Entity A Consolidated Statement of Income "For the Year Ended December 31, 19X1" Sales " $13,965 " Cost of sales " (10,290)" Depreciation and amortization (445) "Selling, general, and administrative expenses" " (1,890)" Interest expense (235) Equity in earnings of affiliate 45 Gain on sale of facility 80 Interest income 55 Insurance proceeds 15 Loss from patent infringement lawsuit (30) Income before income taxes " 1,270 " Provision for income taxes (510) Net income $760 ##### [230-10-55-20](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-20) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:40.068Z to 2026-09-09T23:11:40.068Z Record version: sha256:07421f0f6014f3b02992cdc5984c96efcdb20a5235ab8f52262b69cafb192a78 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following transactions were entered into by Entity A during 19X1 and are reflected in the preceding financial statements: 1. a Entity A wrote off $350 of accounts receivable when a customer filed for bankruptcy. A provision for losses on accounts receivable of $200 was included in Entity A's selling, general, and administrative expenses. 2. b Entity A collected the third and final annual installment payment of $100 on a note receivable for the sale of inventory and collected the third of four annual installment payments of $150 each on a note receivable for the sale of a plant. Interest on these notes through December 31 totaling $55 was also collected. 3. c Entity A received a distribution of $20 from an affiliate accounted for under the equity method of accounting. Entity A made an accounting policy election to apply the cumulative earnings approach described in paragraph [230-10-45-21D(a)](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-21D) and determined that the distribution was a return on investment. 4. d Entity A sold a facility with a book value of $520 and an original cost of $750 for $600 cash. 5. e Entity A constructed a new facility for its own use and placed it in service. Accumulated expenditures during the year of $1,000 included capitalized interest of $10. 6. f Entity A entered into a capital lease for new equipment with a fair value of $850. The entity classified the lease as a finance lease. Principal payments under the lease obligation totaled $125. 7. g Entity A purchased all of the capital stock of Entity B for $950 in a business combination. The fair values of Entity B's assets and liabilities at the date of acquisition are presented below. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-1328EA69-B497-4EBF-9041-75027FE9CDE6-low.gif) Cash $25 Accounts receivable 155 Inventory 350 "Property, plant, and equipment" 900 Patents 80 Goodwill 70 Accounts payable and accrued expenses (255) Long-term note payable (375) Net assets acquired $950 8. h Entity A borrowed and repaid various amounts under a line-of-credit agreement in which borrowings are payable 30 days after demand. The net increase during the year in the amount borrowed against the line-of-credit totaled $300. 9. i Entity A issued $400 of long-term debt securities. 10. j Entity A's provision for income taxes included a deferred provision of $150. 11. k Entity A's depreciation of property, plant, and equipment and amortization of right-of-use assets arising from a finance lease totaled $430, and amortization of intangible assets totaled $15. 12. l Entity A's selling, general, and administrative expenses included an accrual for incentive compensation of $50 that has been deferred by executives until their retirement. The related obligation was included in other liabilities. 13. m Entity A collected insurance proceeds of $15 ($5 from a business interruption claim that resulted when a storm precluded shipment of inventory for one week and $10 from a property claim that resulted when fully depreciated manufacturing equipment was damaged by a fire). 14. n Entity A paid $30 to settle a lawsuit for patent infringement. 15. o Entity A issued $1,000 of additional common stock of which $500 was issued for cash and $500 was issued upon conversion of long-term debt. 16. p Entity A paid dividends of $200. 17. q Entity A paid $100 from its restricted cash for workers' compensation claims accrued before January 1, 19X1. Before January 1, 19X1, Entity A's insurer required $225 to be set aside by a contractual arrangement for the payment of specific workers' compensation claims. ##### [230-10-55-21](https://asc.understandingaccounting.org/asc/230/10/#230-10-55-21) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:40.068Z to 2026-09-09T23:11:40.068Z Record version: sha256:8e0e91eeed65d87af22866d9765ceed07a8095670aa7a3155c71f3ba274d6b93 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Based on the financial data from the preceding paragraphs, which illustrated the statement of cash flows prepared using the direct method, the following computations illustrate a method of indirectly determining cash received from customers and cash paid to suppliers and employees for use in a statement of cash flows under the direct method. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-50BFA529-672E-4BA0-B341-AFF4BFFAD8E2-low.gif) Cash received from customers during the year: Customer sales " $13,965 " Collection of installment payment for sale of inventory 100 Gross accounts receivable at beginning of year " $2,370 " Accounts receivable acquired in purchase of Entity B 155 Accounts receivable written off (350) Gross accounts receivable at end of year " (2,390)" Excess of new accounts receivable over collections from customers (215) Cash received from customers during the year " $13,850 " Cash paid to suppliers and employees during the year: Cost of sales " $10,290 " General and administrative expenses " $1,890 " Expenses not requiring cash outlay (provision for uncollectible accounts receivable) (200) Net expenses requiring cash payments " 1,690 " Inventory at beginning of year " (1,230)" Inventory acquired in purchase of Entity B (350) Inventory at end of year " 1,375 " Net decrease in inventory from Entity A's operations (205) Adjustments for changes in related accruals: Account balances at beginning of year Accounts payable and accrued expenses " $1,085 " Other liabilities 225 Prepaid expenses (110) Total " 1,200 " Accounts payable and accrued expenses acquired in purchase of Entity B 255 Account balances at end of year Accounts payable and accrued expenses " 1,090 " Other liabilities 275 Prepaid expenses (135) Total " (1,230)" Additional cash payments not included in expense 225 Cash paid to suppliers and employees during the year " $12,000 " Source downloaded (UTC): 2026-09-09T23:11:44.196Z to 2026-09-09T23:11:44.196Z Record version: sha256:c40789ce5ce5c9634a52337c2dbe0d85a63248379ec563d8c82c440d364852a3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-10-60: 60 Relationships [Read section](https://asc.understandingaccounting.org/asc/230/10/#60-relationships) SEC content: no ##### [230-10-60-1](https://asc.understandingaccounting.org/asc/230/10/#230-10-60-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:44.196Z to 2026-09-09T23:11:44.196Z Record version: sha256:089512852cf9c4051d84d25a35d0b8240689d1021755d5a4963236aab2da026a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Other Presentation Matters Sections of individual Subtopics address various presentation matters related to the Subtopic, including the statement of [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.") flows and other financial statement matters. The following may not be an all-inclusive list; there are numerous sources that address the statement of cash flows in the relevant Subtopics. #### Investments—Debt Securities ##### [230-10-60-2](https://asc.understandingaccounting.org/asc/230/10/#230-10-60-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:44.196Z to 2026-09-09T23:11:44.196Z Record version: sha256:86785a9a3850dcb8b84bf2fde9d3f0519a0fd9020adc5b9679f8182bc02b12cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on classification and reporting in the statement of cash flows of cash flows from available-for-sale, held-to-maturity, and trading debt securities, see Topic 320. #### Investments—Equity Securities ##### [230-10-60-2A](https://asc.understandingaccounting.org/asc/230/10/#230-10-60-2A) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:44.196Z to 2026-09-09T23:11:44.196Z Record version: sha256:f0a4e7a80adbbb69c812e92895bc5a766ffac9a91bfdeb6cc25fc097dbff6968 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on classification and reporting in the statement of cash flows of cash flows from equity securities, see Topic 321 on investments—equity securities. #### Investments—Other ##### [230-10-60-3](https://asc.understandingaccounting.org/asc/230/10/#230-10-60-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:44.196Z to 2026-09-09T23:11:44.196Z Record version: sha256:a22c8b123956c111032539d11e984d6b55a99767763fd9ef260a4d6208b0f0eb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on classification in the statement of cash flows of cash receipts and cash payments related to life settlement contracts, see Section 325-30-45. #### Foreign Currency Matters ##### [230-10-60-4](https://asc.understandingaccounting.org/asc/230/10/#230-10-60-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:44.196Z to 2026-09-09T23:11:44.196Z Record version: sha256:0c2bc786fe515cb77d6c624da69a49f0eb9a47f08f4c3d07c51753ad4986a4f9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For reporting and implementation guidance for presenting a statement of cash flows of an entity with foreign currency transactions or foreign currency operations, see Topic 830. ##### [230-10-60-5](https://asc.understandingaccounting.org/asc/230/10/#230-10-60-5) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:44.196Z to 2026-09-09T23:11:44.196Z Record version: sha256:fefdc0969e81e86ba7cea7f95ae4bd3903274f942d30f54569b49739e92b6538 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-10](https://asc.understandingaccounting.org/updates/asu-2014-10/). Source downloaded (UTC): 2026-09-09T23:11:46.877Z to 2026-09-09T23:11:46.877Z Record version: sha256:9416925b673bbd89655e37b07291d69f9d486cf07b4b265c50778ef62d3f2d0a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-10-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/230/10/#65-transition-and-open-effective-date-information) SEC content: no ##### [230-10-65-1](https://asc.understandingaccounting.org/asc/230/10/#230-10-65-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:46.877Z to 2026-09-09T23:11:46.877Z Record version: sha256:18e3a2c4856d61a3868a418243e8a3622fe05cfc05709b7cfa864b533d902547 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 12/17/2014 after the end of the transition period stated in Accounting Standards Update No. 2012-05, _Statement of Cash Flows (Topic 230): Not-for-Profit Entities: Classification of the Sale Proceeds of Donated Financial Assets in the Statement of Cash Flows._ ##### [230-10-65-2](https://asc.understandingaccounting.org/asc/230/10/#230-10-65-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:46.877Z to 2026-09-09T23:11:46.877Z Record version: sha256:5c6b9a73cc7dbb283109c3c7ccdaf80da41812f5007839762c5c190bed600319 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 08/12/2020 after the end of the transition period stated in Accounting Standards Update No. 2016-15, _Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments_. ##### [230-10-65-3](https://asc.understandingaccounting.org/asc/230/10/#230-10-65-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:46.877Z to 2026-09-09T23:11:46.877Z Record version: sha256:57eba70d26bdca8849fa392bb373354422036108fb1d53f540f5359c4fd5e776 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 07/20/2020 after the end of the transition period stated in Accounting Standards Update No. 2016-18, _Statement of Cash Flows (Topic 230): Restricted Cash_. Source downloaded (UTC): 2026-09-09T23:11:52.130Z to 2026-09-09T23:12:08.856Z Record version: sha256:fd836a241c29649081f5e8d69b8b8f4526b596eddc5a42168572ef1b2ccc4a76 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-830: Statement of Cash Flows — Foreign Currency Matters ### Machine-generated study aids ```json { "summary": "This subtopic tells an entity with foreign currency transactions or foreign operations how to translate cash flows in the statement of cash flows. Foreign currency cash flows are reported at the reporting currency equivalent using the exchange rates in effect at the time of the cash flows (a weighted-average rate may be used if the result is substantially the same). The effect of exchange rate changes on cash, cash equivalents, and restricted cash held in foreign currencies is shown as a separate part of the reconciliation of the change in total cash for the period.", "key_points": [ "A statement of cash flows of an entity with foreign currency transactions or foreign operations shall report the reporting currency equivalent of foreign currency cash flows using the exchange rates in effect at the time of the cash flows (230-830-45-1).", "An appropriately weighted average exchange rate for the period may be used if the result is substantially the same as using the rates at the dates of the cash flows; 830-30-45-3 applies to cash receipts and payments (230-830-45-1).", "The effect of exchange rate changes on cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents held in foreign currencies is reported as a separate part of the reconciliation of the change in the total of those amounts during the period (230-830-45-1).", "The exchange rate effect line is not classified as an operating, investing, or financing activity; it reconciles the change in total cash.", "The Subtopic follows the same scope and scope exceptions as Section 830-10-15 (230-830-15-1).", "Example 1 (830-230-55-1 through 55-15) illustrates a direct-method consolidating statement of cash flows for a U.S. parent with one subsidiary whose local currency is the functional currency and one in a highly inflationary economy whose functional currency is the U.S. dollar." ], "categories": [ "Foreign currency", "Cash flows", "Financial statement presentation", "Presentation" ], "audience_level": "intermediate", "student_note": "Exam questions often test that the exchange-rate effect on foreign-currency cash balances is a separate reconciling item, not an operating, investing, or financing cash flow. A common misunderstanding is translating foreign cash flows at the year-end (current) rate; the rule is the rate at the date of the cash flow, with a weighted average allowed only as an approximation.", "related_topics": [ "830-10", "830-30", "830-230", "230-10" ], "key_concepts": [ "reporting currency equivalent", "exchange rate at date of cash flow", "weighted-average exchange rate", "effect of exchange rate changes on cash", "restricted cash and restricted cash equivalents", "functional currency", "highly inflationary economy", "direct method statement of cash flows" ] } ``` Source downloaded (UTC): 2026-09-09T23:11:52.130Z to 2026-09-09T23:11:52.130Z Record version: sha256:dcb58f2d86ce2d1f7c9304a09f070de7fcb2675163802a13252787957319ded6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-830-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/230/830/#00-status) SEC content: no ##### [230-830-00-1](https://asc.understandingaccounting.org/asc/230/830/#230-830-00-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:52.130Z to 2026-09-09T23:11:52.130Z Record version: sha256:0a2bae12b141a4eaa0d14ad2f7c9f48fc272718f065152aee730e9cecedc4c01 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Cash EquivalentsAddedAccounting Standards Update No. 2014-0603/14/2014
830-230-45-1AmendedAccounting Standards Update No. 2016-1811/17/2016
830-230-45-1AmendedAccounting Standards Update No. 2014-0603/14/2014
830-230-55-12AmendedMaintenance Update 2018-12 (PDF)09/10/2018
Source downloaded (UTC): 2026-09-09T23:11:56.020Z to 2026-09-09T23:11:56.020Z Record version: sha256:ff66d31dea3f4d65e67e65260a8a9b8db1f2c8d4e99387efbcae292f45276f0d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-830-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/230/830/#05-overview-and-background) SEC content: no ##### [230-830-05-1](https://asc.understandingaccounting.org/asc/230/830/#230-830-05-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:56.020Z to 2026-09-09T23:11:56.020Z Record version: sha256:a633ccc9813b1be218f09513be9421989ef6441055b258ed56a54f90f1bc0be4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on reporting foreign currency matters in a statement of cash flows. Source downloaded (UTC): 2026-09-09T23:11:58.187Z to 2026-09-09T23:11:58.187Z Record version: sha256:db2f44423b3021da38560ddecf113adc53db84a71027d7f722af340deed139fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-830-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/230/830/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [230-830-15-1](https://asc.understandingaccounting.org/asc/230/830/#230-830-15-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:11:58.187Z to 2026-09-09T23:11:58.187Z Record version: sha256:8bc9bb516e19a0a740d6c9a04153d47aba485afcdd90490296e9f5e724f61722 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 830-10-15. Source downloaded (UTC): 2026-09-09T23:12:03.500Z to 2026-09-09T23:12:03.500Z Record version: sha256:95f0241462775f0a1b6839f14f1e499a5db276a4169692360e7761670263b562 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-830-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/230/830/#45-other-presentation-matters) SEC content: no ##### [230-830-45-1](https://asc.understandingaccounting.org/asc/230/830/#230-830-45-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:03.500Z to 2026-09-09T23:12:03.500Z Record version: sha256:7ab1e0aea78157f8db160b7864f8cd1a16c7cebbfb3db05c0797fb28296b7c69 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A statement of cash flows of an entity with [foreign currency transactions](https://asc.understandingaccounting.org/glossary/f/#foreign-currency-transactions "Transactions whose terms are denominated in a currency other than the entity's functional currency. Foreign currency transactions arise when a reporting entity does any of the following: Buys or sells on credit goods or services whose prices are denominated in foreign currency Borrows or lends funds and the amounts payable or receivable are denominated in foreign currency Is a party to an unperformed forward exchange contract For other reasons, acquires or disposes of assets, or incurs or settles liabilities denominated in foreign currency.") or foreign operations shall report the [reporting currency](https://asc.understandingaccounting.org/glossary/r/#reporting-currency "The currency in which a reporting entity prepares its financial statements.") equivalent of [foreign currency](https://asc.understandingaccounting.org/glossary/f/#foreign-currency "A currency other than the functional currency of the entity being referred to (for example, the dollar could be a foreign currency for a foreign entity). Composites of currencies, such as the Special Drawing Rights, used to set prices or denominate amounts of loans, and so forth, have the characteristics of foreign currency.") cash flows using the exchange rates in effect at the time of the cash flows. An appropriately weighted average [exchange rate](https://asc.understandingaccounting.org/glossary/e/#exchange-rate "The ratio between a unit of one currency and the amount of another currency for which that unit can be exchanged at a particular time.") for the period may be used for [translation](https://asc.understandingaccounting.org/glossary/t/#translation "See Foreign Currency Translation.") if the result is substantially the same as if the rates at the dates of the cash flows were used. (That is, paragraph [830-30-45-3](https://asc.understandingaccounting.org/asc/830/30/#830-30-45-3) applies to cash receipts and cash payments.) The statement of cash flows shall report the effect of exchange rate changes on cash, [cash equivalents](https://asc.understandingaccounting.org/glossary/c/#cash-equivalents "Cash equivalents are short-term, highly liquid investments that have both of the following characteristics: Readily convertible to known amounts of cash So near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less qualify under that definition. Original maturity means original maturity to the entity holding the investment. For example, both a three-month U.S. Treasury bill and a three-year U.S. Treasury note purchased three months from maturity qualify as cash equivalents. However, a Treasury note purchased three years ago does not become a cash equivalent when its remaining maturity is three months. Examples of items commonly considered to be cash equivalents are Treasury bills, commercial paper, money market funds, and federal funds sold (for an entity with banking operations)."), and amounts generally described as restricted cash or restricted cash equivalents held in foreign currencies as a separate part of the reconciliation of the change in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents during the period. See Example 1 (paragraph [830-230-55-1](https://asc.understandingaccounting.org/asc/230/830/#230-830-55-1)) for an illustration of this guidance. Source downloaded (UTC): 2026-09-09T23:12:06.060Z to 2026-09-09T23:12:06.060Z Record version: sha256:bcf7a8ecda62a2cfac9493fedb65fc03728cb10ce69af6e802599cd907edef43 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-830-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/230/830/#55-implementation-guidance-and-illustrations) SEC content: no #### Illustrations ##### [230-830-55-1](https://asc.understandingaccounting.org/asc/230/830/#230-830-55-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:06.060Z to 2026-09-09T23:12:06.060Z Record version: sha256:219ba2e28c18a81f0edd49537331f736ac91fa03aa3928fd71384dde84c74f99 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates a statement of cash flows under the direct method for a manufacturing entity with foreign operations. The illustrations 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. ##### [230-830-55-2](https://asc.understandingaccounting.org/asc/230/830/#230-830-55-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:06.060Z to 2026-09-09T23:12:06.060Z Record version: sha256:e692d43e59355a55ca303dc0122796b131851ff4de46234dfb621a4163e27419 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is a consolidating statement of cash flows for the year ended December 31, 19X1, for Entity F, a multinational U.S. corporation engaged principally in manufacturing activities, which has two wholly owned foreign subsidiaries— Subsidiary A and Subsidiary B. For Subsidiary A, the [local currency](https://asc.understandingaccounting.org/glossary/l/#local-currency "The currency of a particular country being referred to.") is the [functional currency](https://asc.understandingaccounting.org/glossary/f/#functional-currency "An entity's functional currency is the currency of the primary economic environment in which the entity operates; normally, that is the currency of the environment in which an entity primarily generates and expends cash. (See paragraphs 830-10-45-2830-10-45-3830-10-45-4830-10-45-5830-10-45-6 and 830-10-55-3830-10-55-4830-10-55-5830-10-55-6830-10-55-7.)"). For Subsidiary B, which operates in a highly inflationary economy, the U.S. dollar is the functional currency. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-2208F10E-9A57-4169-8203-7AF4A348A7BB-low.gif) ENTITY F CONSOLIDATING STATEMENT OF CASH FLOWS "FOR THE YEAR ENDED DECEMBER 31, 19X1" Increase (Decrease) in Cash and Cash Equivalents Parent Entity Subsidiary A Subsidiary B Eliminations Consolidated Cash flows from operating activities: Cash received from customers " $4,610 " (a) $888 (a) $561 (a) $(430) " $5,629 " Cash paid to suppliers and employees " (3,756)" (a) (806) (a) (370) (a) 430 " (4,502)" Interest paid (170) (86) (135) - (391) Income taxes paid (158) (25) (21) - (204) Interest and dividends received 57 - - (22) 35 Miscellaneous cash received (paid) - 45 (5) - 40 Net cash provided by operating activities 583 16 30 (22) 607 Cash flows from investing activities: Proceeds from sale of equipment 150 116 14 - 280 Payments for purchase of equipment (450) (258) (15) - (723) Net cash used in investing activities (300) (142) (1) - (443) Cash flows from financing activities: Proceeds from issuance of short-term debt 20 75 - - 95 Intra-entity loan (15) - 15 - - Proceeds from issuance of long-term debt - 165 - - 165 Repayment of long-term debt (200) (105) (35) - (340) Payment of dividends (120) (22) - 22 (120) Net cash provided by (used in) financing activities (315) 113 (20) 22 (200) Effect of exchange rate changes on cash - 9 (b) (5) (b) - 4 Net change in cash and cash equivalents (32) (4) 4 - (32) Cash and cash equivalents at beginning of year 255 15 5 - 275 Cash and cash equivalents at end of year $223 $11 $9 $- $243 (a) The computation of this amount is provided in paragraph 830-230-55-14. (b) The computation of this amount is provided in paragraph 830-230-55-15. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-5CAFE7E7-BFC4-490A-A6D5-A437E93EB059-low.gif) Reconciliation of net income to net cash provided by operating activities: Parent Entity Subsidiary A Subsidiary B Eliminations Consolidated Net income $417 $50 $(66) $(37) $364 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 350 85 90 - 525 (Gain) loss on sale of equipment (115) - 25 - (90) Writedown of facility to net realizable value 50 - - - 50 Exchange gain - - (115) - (115) Provision for deferred taxes 90 - - - 90 Increase in accounts receivable (85) (37) (9) - (131) (Increase) decrease in inventory (80) (97) 107 15 (55) Increase (decrease) in accounts payable and accrued expenses (41) 16 (6) - (31) Increase (decrease) in interest and taxes payable (3) (1) 4 - - Net cash provided by operating activities $583 $16 $30 $(22) $607 ##### [230-830-55-3](https://asc.understandingaccounting.org/asc/230/830/#230-830-55-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:06.060Z to 2026-09-09T23:12:06.060Z Record version: sha256:77e6a68ddf26b88852d059b8bd2f0db4bd309ba0ac6c8cad485d6b613abcee83 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The entity would make the following disclosure. - Cash in excess of daily requirements is invested in marketable securities consisting of U.S. Treasury bills with maturities of three months or less. Such investments are deemed to be cash equivalents for purposes of the statement of cash flows. ##### [230-830-55-4](https://asc.understandingaccounting.org/asc/230/830/#230-830-55-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:06.060Z to 2026-09-09T23:12:06.060Z Record version: sha256:279d75f5f516fe9b44824f27ba546248fffb83ecf52aa68ca6026fd4bf21a331 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Summarized in the following tables is financial information for the current year for Entity F, which provides the basis for the statement of cash flows presented in paragraph [830-230-55-2](https://asc.understandingaccounting.org/asc/230/830/#230-830-55-2). - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-66884EBE-B223-4CA6-BA40-3850A6E64227-low.gif) Entity F Consolidating Statement of Financial Position "December 31, 19X1" Parent Entity Subsidiary A Subsidiary B Eliminations Consolidated Assets: Cash and cash equivalents $223 $11 $9 $- $243 Accounts receivable 725 95 20 - 840 Intra-entity loan receivable 15 - - (15) - Inventory 630 281 96 (15) 992 Investments 730 - - (730) - "Property, plant, and equipment, net" " 3,305 " " 1,441 " 816 - " 5,562 " Other assets 160 11 - - 171 Total assets " $5,788 " " $1,839 " $941 $(760) " $7,808 " Liabilities: Accounts payable and accrued expenses $529 $135 $38 $- $702 Interest payable 35 11 4 - 50 Taxes payable 45 5 2 - 52 Short-term debt 160 135 - - 295 Intra-entity debt - - 15 (15) - Long-term debt " 1,100 " 315 40 - " 1,455 " Deferred taxes 342 - - - 342 Total liabilities " 2,211 " 601 99 (15) " 2,896 " Stockholders' equity: Capital stock 550 455 275 (730) 550 Retained earnings " 3,027 " 554 567 (15) " 4,133 " Cumulative translation adjustment - 229 - - 229 Total stockholders' equity " 3,577 " " 1,238 " 842 (745) " 4,912 " Total liabilities and stockholders' equity " $5,788 " " $1,839 " $941 $(760) " $7,808 " - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-8F5C2DAB-F445-45BA-BB4F-6E2D7E03CEF5-low.gif) Entity F Consolidating Statement of Income "For the Year Ended December 31, 19X1" Parent Entity Subsidiary A Subsidiary B Eliminations Consolidated Revenues " $4,695 " $925 $570 $(430) " $5,760 " Cost of sales " (3,210)" (615) (406) 415 " (3,816)" Depreciation and amortization (350) (85) (90) - (525) General and administrative expenses (425) (110) (65) - (600) Interest expense (165) (90) (135) - (390) Interest and dividend income 57 - - (22) 35 Gain (loss) on sale of equipment 115 - (25) - 90 Miscellaneous income (expense) (50) 45 (5) - (10) Exchange gain - - 115 - 115 Income before income taxes 667 70 (41) (37) 659 Provision for income taxes (250) (20) (25) - (295) Net income $417 $50 $(66) $(37) $364 ##### [230-830-55-5](https://asc.understandingaccounting.org/asc/230/830/#230-830-55-5) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:06.060Z to 2026-09-09T23:12:06.060Z Record version: sha256:c9a0bd9046f0d7c21fd17ef435a558e5068be60e81141d2cfd370d47cd861f63 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The U.S. dollar equivalents of one unit of local currency applicable to Subsidiary A and to Subsidiary B are as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-9AEAB4C2-2A85-4F5B-A6FD-99CC83A2B99C-low.gif) Subsidiary A Subsidiary B 1/1/X1 .40 .05 Weighted average .43 .03 12/31/X1 .45 .02 ##### [230-830-55-6](https://asc.understandingaccounting.org/asc/230/830/#230-830-55-6) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:06.060Z to 2026-09-09T23:12:06.060Z Record version: sha256:3a665da5d5556f20b58ee5c8425cf44d2128b82bf7dc6e9611abd1135c775d87 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The computation of the weighted-average [exchange rate](https://asc.understandingaccounting.org/glossary/e/#exchange-rate "The ratio between a unit of one currency and the amount of another currency for which that unit can be exchanged at a particular time.") for Subsidiary A excludes the effect of Subsidiary A's sale of inventory to the parent entity at the beginning of the year discussed in paragraph [830-230-55-10(a)](https://asc.understandingaccounting.org/asc/230/830/#230-830-55-10). ##### [230-830-55-7](https://asc.understandingaccounting.org/asc/230/830/#230-830-55-7) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:06.060Z to 2026-09-09T23:12:06.060Z Record version: sha256:699cd6a9195743ee1023b4a8513390ff6ef62b030b32c15e3073f2cc9a9ecf01 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Comparative statements of financial position for the parent entity and for each of the foreign subsidiaries are as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-B2B81539-15F9-4682-A560-A1A975F5F110-low.gif) COMPARATIVE STATEMENTS OF FINANCIAL POSITION Parent Enity Subsidiary A Subsidiary A Subsidiary B Subsidiary B U.S. Dollars (USD) Local Currency (LC) U.S. Dollars (USD) Local Currency (LC) U.S. Dollars (USD) 1/1/X1 12/13/X1 Change 1/1/X1 12/31/X1 Change 1/1/X1 12/31/X1 Change 1/1/X1 12/31/X1 Change 1/1/X1 12/31/X1 Change Assets Cash and cash equivalents 255 223 (32) 38 25 (13) 15 11 (4) 100 449 349 5 9 4 Accounts receivable 640 725 85 125 210 85 50 95 45 700 " 1,000 " 300 35 20 (15) Intra-entity loan receivable - 15 15 - - - - - - - - - - - - Inventory 550 630 80 400 625 225 160 281 121 " 2,900 " " 3,200 " 300 203 96 (107) Investments 730 730 - - - - - - - - - - - - - "Property, plant, and equipment, net" " 3,280 " " 3,305 " 25 " 3,075 " " 3,202 " 127 " 1,230 " " 1,441 " 211 " 6,200 " " 5,900 " (300) 930 816 (114) Other assets 170 160 (10) 25 25 - 10 11 1 - - - - - - Total assets " 5,625 " " 5,788 " 163 " 3,663 " " 4,087 " 424 " 1,465 " " 1,839 " 374 " 9,900 " " 10,549 " 649 " 1,173 " 941 (232) Liabilities: Accounts payable and accrued expenses 570 529 (41) 263 300 37 105 135 30 " 2,100 " " 1,900 " (200) 105 38 (67) Interest payable 40 35 (5) 15 24 9 6 11 5 200 200 - 10 4 (6) Taxes payable 43 45 2 25 12 (13) 10 5 (5) - 120 120 - 2 2 Short-term debt 140 160 20 125 300 175 50 135 85 - - - - - - Intra-entity debt - - - - - - - - - - 500 500 - 15 15 Long-term debt " 1,300 " " 1,100 " (200) 550 700 150 220 315 95 " 3,000 " " 2,000 " " (1,000)" 150 40 (110) Deferred taxes 252 342 90 - - - - - - - - - - - - Total liabilities " 2,345 " " 2,211 " (134) 978 " 1,336 " 358 391 601 210 " 5,300 " " 4,720 " (580) 265 99 (166) Stockholders' equity: Capital stock 550 550 - " 1,300 " " 1,300 " - 455 455 - " 1,375 " " 1,375 " - 275 275 - Retained earnings " 2,730 " " 3,027 " 297 " 1,385 " " 1,451 " 66 526 554 28 " 3,225 " " 4,454 " " 1,229 " 633 567 (66) Cumulative translation adjustment - - - - - - 93 229 136 - - - - - - Total stockholders' equity " 3,280 " " 3,577 " 297 " 2,685 " " 2,751 " 66 " 1,074 " " 1,238 " 164 " 4,600 " " 5,829 " " 1,229 " 908 842 (66) Total liabilities and stockholders' equity " 5,625 " " 5,788 " 163 " 3,663 " " 4,087 " 424 " 1,465 " " 1,839 " 374 " 9,900 " " 10,549 " 649 " 1,173 " 941 (232) ##### [230-830-55-8](https://asc.understandingaccounting.org/asc/230/830/#230-830-55-8) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:06.060Z to 2026-09-09T23:12:06.060Z Record version: sha256:4f0961ad3f5700fee391657825d73cbaced44d8373cf20148fa822e218b4bfc5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Statements of income in local currency and U.S. dollars for each of the foreign subsidiaries are as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-306774E0-9C8C-45D8-97E9-ED6EE5EE001A-low.gif) STATEMENTS OF INCOME "FOR THE YEAR ENDED DECEMBER 31, 19X1" Subsidiary A Subsidiary B Local Currency U.S. Dollars Local Currency U.S Dollars Revenues " LC 2,179 " USD 925 (a) " LC 19,000 " USD 570 Cost of sales " (1,458)" (615) (b) " (9,667)" (406) Depreciation and amortization (198) (85) (600) (90) General and administrative expenses (256) (110) " (2,167)" (65) Interest expense (209) (90) " (4,500)" (135) Gain (loss) on sale of equipment - - 150 (25) Miscellaneous income (expense) 105 45 (167) (5) Exchange gain - - - 115 Income before income taxes 163 70 " 2,049 " (41) Provision for income taxes (47) (20) (820) (25) Net income LC 116 USD 50 " LC 1,229 " USD (66) (a) This amount was computed as follows: Sale to parent entity at beginning of year LC 400@.40 = USD 160 Sales to customers " LC 1,779@.43 = " 765 Total sales in U.S. dollars USD 925 (b) This amount was computed as follows: Cost of sale to parent entity at beginning of year LC 400@.40 = USD 160 Cost of sales to customers " LC 1,058@.43 = " 455 Total cost of sales in U.S. dollars USD 615 ##### [230-830-55-9](https://asc.understandingaccounting.org/asc/230/830/#230-830-55-9) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:06.060Z to 2026-09-09T23:12:06.060Z Record version: sha256:59020b5acf8e3609cb25757ab0e6d6628d6e660bcf78265028ad22d3db5998f7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All of the following transactions were entered into during the year by the parent entity and are reflected in the preceding financial statements: 1. a The parent entity invested cash in excess of daily requirements in U.S. Treasury bills. Interest earned on such investments totaled USD 35. 2. b The parent entity sold excess property with a net book value of USD 35 for USD 150. 3. c The parent entity's capital expenditures totaled USD 450. 4. d The parent entity wrote down to its estimated net realizable value of USD 25 a facility with a net book value of USD 75. 5. e The parent entity's short-term debt consisted of commercial paper with maturities not exceeding 60 days. 6. f The parent entity repaid long-term notes of USD 200. 7. g The parent entity's depreciation totaled USD 340, and amortization of intangible assets totaled USD 10. 8. h The parent entity's provision for income taxes included deferred taxes of USD 90. 9. i Because of a change in product design, the parent entity purchased all of Subsidiary A's beginning inventory for its book value of USD 160. All of the inventory was subsequently sold by the parent entity. 10. j The parent entity received a dividend of USD 22 from Subsidiary A. The dividend was credited to the parent entity's income. 11. k The parent entity purchased from Subsidiary B USD 270 of merchandise of which USD 45 remained in the parent entity's inventory at year-end. Intra-entity profit on the remaining inventory totaled USD 15. 12. l The parent entity loaned USD 15, payable in U.S. dollars, to Subsidiary B. 13. m Entity F paid dividends totaling USD 120 to shareholders. ##### [230-830-55-10](https://asc.understandingaccounting.org/asc/230/830/#230-830-55-10) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:06.060Z to 2026-09-09T23:12:06.060Z Record version: sha256:82d78fb555de9b92141b4a9cabc394c773cd0ddc102e7c06fe7e12573790f7b5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All of the following transactions were entered into during the year by Subsidiary A and are reflected in the above financial statements. The U.S. dollar equivalent of the local currency amount based on the exchange rate at the date of each transaction is included. Except for the sale of inventory to the parent entity (the transaction in \[a\]), Subsidiary A's sales and purchases and operating cash receipts and payments occurred evenly throughout the year. 1. a Because of a change in product design, Subsidiary A sold all of its beginning inventory to the parent entity for its book value of LC 400 (USD 160). 2. b Subsidiary A sold equipment for its book value of LC 275 (USD 116) and purchased new equipment at a cost of LC 600 (USD 258). 3. c Subsidiary A issued an additional LC 175 (USD 75) of 30-day notes and renewed the notes at each maturity date. 4. d Subsidiary A issued long-term debt of LC 400 (USD 165) and repaid long-term debt of LC 250 (USD 105). 5. e Subsidiary A paid a dividend to the parent entity of LC 50 (USD 22). ##### [230-830-55-11](https://asc.understandingaccounting.org/asc/230/830/#230-830-55-11) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:06.060Z to 2026-09-09T23:12:06.060Z Record version: sha256:cbeaf4d6c9bf2aad251a2bfe80fe83dfed6fd5831a4a6a5015f50cf3fe539a91 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following transactions were entered into during the year by Subsidiary B and are reflected in the preceding financial statements. The U.S. dollar equivalent of the local currency amount based on the exchange rate at the date of each transaction is included. Subsidiary B's sales and operating cash receipts and payments occurred evenly throughout the year. For convenience, all purchases of inventory were based on the weighted-average exchange rate for the year. Subsidiary B uses the first-in, first-out (FIFO) method of inventory valuation. 1. a Subsidiary B had sales to the parent entity as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-75F457E0-C421-43C8-81BB-D500FBCD101D-low.gif) Local Currency U.S. Dollars Intra-entity sales " LC 9,000 " USD 270 Cost of sales " (4,500)" (180) Gross profit " LC 4,500 " USD 90 2. b Subsidiary B sold equipment with a net book value of LC 200 (USD 39) for LC 350 (USD 14). New equipment was purchased at a cost of LC 500 (USD 15). 3. c Subsidiary B borrowed USD 15 (LC 500), payable in U.S. dollars, from the parent entity. 4. d Subsidiary B repaid LC 1,000 (USD 35) of long-term debt. ##### [230-830-55-12](https://asc.understandingaccounting.org/asc/230/830/#230-830-55-12) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:06.060Z to 2026-09-09T23:12:06.060Z Record version: sha256:3fa7311a27970f78dd04c1006b43fc6377990ed904fa97d5501080366637a725 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Statements of cash flows in the local currency and in U.S. dollars for Subsidiary A and Subsidiary B are as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-4D6AD280-BDB0-47CB-BB48-ED09C91B0ED3-low.gif) STATEMENTS OF CASH FLOWS "FOR THE YEAR ENDED DECEMBER 31, 19X1" Increase (Decrease) in Cash Subsidiary A Subsidiary B Local Currency U.S. Dollars Local Currency U.S Dollars Cash flows from operating activities: Cash received from customers " LC 2,094 " (a) USD 888 (a) " LC 18,700 " (a) USD 561 (a) Cash paid to suppliers and employees " (1,902)" (a) (806) (a) " (12,334)" (a) (370) (a) Interest paid (200) (86) (b) " (4,500)" (135) (b) Income taxes paid (60) (25) (b) (700) (21) (b) Miscellaneous receipts (payments) 105 45 (b) (167) (5) (b) Net cash provided by operating activities 37 16 999 30 Cash flows from investing activities: Proceeds from sale of equipment 275 116 (c) 350 14 (c) Payments for purchase of equipment (600) (258) (c) (500) (15) (c) Net cash used in investing activities (325) (142) (150) (1) Cash flows from financing activities: Proceeds from issuance of short-term debt 175 75 (c) - - Proceeds from intra-entity loan - - 500 15 (c) Proceeds from issuance of long-term debt 400 165 (c) - - Repayment of long-term debt (250) (105) (c) " (1,000)" (35) (c) Payment of dividends (50) (22) (c) - - Net cash provided by (used in) financing activities 275 113 (500) (20) Effect of exchange rate changes on cash - 9 (d) - (5) (d) Net increase (decrease) in cash (13) (4) 349 4 Cash at beginning of year 38 15 100 5 Cash at end of year LC 25 USD 11 LC 449 USD 9 (a) The computation of this amount is provided in paragraph 830-230-55-14. (b) This amount represents the U.S. dollar equivalent of the foreign currency cash flow based on the weighted-average exchange rate for the year. (c) This amount represents the U.S. dollar equivalent of the foreign currency cash flow based on the exchange rate in effect at the time of the cash flow. (d) The computation of this amount is provided in paragraph 830-230-55-15. ##### [230-830-55-13](https://asc.understandingaccounting.org/asc/230/830/#230-830-55-13) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:06.060Z to 2026-09-09T23:12:06.060Z Record version: sha256:e0467bf1bef7d7b083416b3cd4533ed7f6f1aaa68042f772c5adb9957248427b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reconciliation of net income to net cash provided by operating activities follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-2CAE952F-A744-4D8C-8763-3B35F029F66B-low.gif) Subsidiary A Subsidiary B Local Currency U.S. Dollars Local Currency U.S Dollars Net income LC 116 USD 50 " LC 1,229 " USD (66) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 198 85 (a) 600 90 (b) (Gain) loss on sale of equipment - - (150) 25 (b) Exchange gain - - - (115) (c) Increase in accounts receivable (85) (37) (a) (300) (9) (a) Increase (decrease) in inventory (225) (97) (a) (300) 107 (d) Increase (decrease) in accounts payable and accrued expenses 37 16 (a) (200) (6) (a) Increase (decrease) in interest and taxes payable (4) (1) (a) 120 4 (a) Net cash provided by operating activities LC 37 USD 16 LC 999 USD 30 (a) This amount represents the U.S. dollar equivalent of the foreign currency amount based on the weighted-average exchange rate for the year. (b) This amount represents the U.S. dollar equivalent of the foreign currency amount based on historical exchange rates. (c) This amount represents the exchange gain included in net income as a result of remeasuring Subsidiary B's financial statements from the local currency to U.S. dollars. (d) This amount represents the difference between beginning and ending inventory after remeasurement into U.S. dollars based on historical exchange rates. ##### [230-830-55-14](https://asc.understandingaccounting.org/asc/230/830/#230-830-55-14) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:06.060Z to 2026-09-09T23:12:06.060Z Record version: sha256:9dc14b3887700f37d40d58272fb6ccdd33a1ffd94b380e60ef43f6498a231009 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the computation of cash received from customers and cash paid to suppliers and employees as reported in the consolidating statement of cash flows for Entity F appearing in paragraph [830-230-55-2](https://asc.understandingaccounting.org/asc/230/830/#230-830-55-2). - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-DE60AA57-F0AF-4A0B-BADB-8E73C986B0D9-low.gif) Subsidiary A Subsidiary B Parent Entity Local Currency U.S. Dollars Local Currency U.S. Dollars Cash received from customers during the year Revenues USD 4695 " LC 2,179 " USD 925 " LC 19,000 " USD 570 Increase in accounts receivable (85) (85) (37) (300) (9) Cash received from customers USD 4610 " LC 2,094 " USD 888 " LC 18,700 " USD 561 Cash paid to suppliers and employees during the year Cost of sales USD 3210 " LC 1,458 " USD 615 " LC 9,667 " USD 406 Effect of exchange rate changes on cost of sales - - - - (116) (a) General and administrative expenses 425 256 110 " 2,167 " 65 Total operating expenses requiring cash payments " 3,635 " " 1,714 " 725 " 11,834 " 355 Increase in inventory 80 225 97 300 9 (Increase) decrease in accounts payable and accrued expenses 41 (37) (16) 200 6 Cash paid to suppliers and employees USD 3756 " LC 1,902 " USD 806 " LC 12,334 " USD 370 (a) "This adjustment represents the difference between cost of sales remeasured at historical exchange rates (USD 406) and cost of sales translated based on the weighted-average exchange rate for the year (USD 290). The adjustment is necessary because cash payments for inventory, which were made evenly throughout the year, were based on the weighted-average exchange rate for the year." ##### [230-830-55-15](https://asc.understandingaccounting.org/asc/230/830/#230-830-55-15) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:06.060Z to 2026-09-09T23:12:06.060Z Record version: sha256:0b592a448f0075d3417ae429e16ad72309b0737f5bb0206c4508bb43e6635121 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the computation of the effect of exchange rate changes on cash for Subsidiary A and Subsidiary B. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-7510AC04-263D-4ED7-B4D8-30627EB4B8B2-low.gif) COMPUTATION OF EFFECT OF EXCHANGE RATE CHANGES ON CASH Subsidiary A Subsidiary B Effect on beginning cash balance: Beginning cash balance in local currency LC 38 LC 100 Net change in exchange rate during the year × .05 × (.03 ) Effect on beginning cash balance USD 2 USD (3) Effect from operating activities during the year: Cash provided by operating activities in local currency LC 37 LC 999 Year-end exchange rate × .45 × .02 Operating cash flows based on year-end exchange rate USD 16 (a) USD 20 Operating cash flows reported in the statement of cash flows 16 30 Effect from operating activities during the year - (10) Effect from investing activities during the year: Cash used in investing activities in local currency LC (325) LC (150) Year-end exchange rate × .45 × .02 Investing cash flows based on year-end exchange rate USD (146) USD (3) Investing cash flows reported in the statement of cash flows (142) (1) Effect from investing activities during the year (4) (2) Effect from financing activities during the year: Cash provided by (used in) financing activities in local currency LC 275 LC (500) Year-end exchange rate × .45 × .02 Financing cash flows based on year-end USD 124 USD (10) Financing cash flows reported in the statement of cash flows 113 (20) Effect from financing activities during the year 11 10 Effect of exchange rate changes on cash USD 9 USD (5) (a) This amount includes the effect of rounding. Source downloaded (UTC): 2026-09-09T23:12:12.874Z to 2026-09-09T23:12:23.520Z Record version: sha256:16cd9e4efa9138ed10879bc6cf0b69fb8d427abd5da58a83326096368b4e2977 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-915: Statement of Cash Flows — Development Stage Entities ### Machine-generated study aids ```json { "summary": "ASC 230-915 formerly required a development stage entity to present inception-to-date (cumulative) amounts in its statement of cash flows in addition to the amounts for the current period. Every paragraph in the subtopic (230-915-05-1, 15-1, and 45-1) was superseded by ASU 2014-10, which eliminated the development stage entity reporting concept from U.S. GAAP. As a result, entities formerly in the development stage now prepare a statement of cash flows under ASC 230 exactly like any other entity, with no cumulative-since-inception column.", "key_points": [ "All content of ASC 230-915 — paragraphs 230-915-05-1, 230-915-15-1, and 230-915-45-1 — has been superseded by Accounting Standards Update No. 2014-10.", "ASU 2014-10 removed the incremental reporting requirements unique to development stage entities, including the inception-to-date cash flow information previously required by 230-915-45-1.", "Because the subtopic is empty, a development stage entity's cash flow statement is governed solely by the general requirements of ASC 230 (operating, investing, and financing classifications).", "No scope guidance remains in 230-915-15, so there is no separate class of entity to which special cash flow presentation applies.", "Students should treat this subtopic as historical: it is retained in the Codification only as a superseded shell for reference and transition purposes." ], "categories": [ "Presentation", "Cash flows", "Transition and effective dates", "Financial statement presentation" ], "audience_level": "introductory", "student_note": "The takeaway is simply that development stage entity reporting no longer exists: ASU 2014-10 wiped out the inception-to-date cash flow column. The common mistake is citing old pre-2014 guidance or textbooks that still require cumulative-since-inception disclosures for start-up companies.", "related_topics": [ "230", "915", "205-40", "275" ], "key_concepts": [ "development stage entity", "superseded guidance", "inception-to-date information", "statement of cash flows", "cumulative amounts since inception", "presentation requirements" ] } ``` Source downloaded (UTC): 2026-09-09T23:12:12.874Z to 2026-09-09T23:12:12.874Z Record version: sha256:1d3b64e8bf7fc3377fdd3ac5224d780c10ebd1071aa8de7f441a773b0b87ad5b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-915-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/230/915/#00-status) SEC content: no ##### [230-915-00-1](https://asc.understandingaccounting.org/asc/230/915/#230-915-00-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:12.874Z to 2026-09-09T23:12:12.874Z Record version: sha256:3c791788b1e0d7546500179234fdf851b7e1d1e0aca32b1b645e3a98e6c919c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Development Stage EntitySupersededAccounting Standards Update No. 2014-1006/10/2014
915-230-05-1SupersededAccounting Standards Update No. 2014-1006/10/2014
915-230-15-1SupersededAccounting Standards Update No. 2014-1006/10/2014
915-230-45-1SupersededAccounting Standards Update No. 2014-1006/10/2014
Source downloaded (UTC): 2026-09-09T23:12:14.518Z to 2026-09-09T23:12:14.518Z Record version: sha256:5b2861bb729eaed24c9cb5b3911ded9091cf61011efcf0f5293e25e37ad09453 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-915-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/230/915/#05-overview-and-background) SEC content: no ##### [230-915-05-1](https://asc.understandingaccounting.org/asc/230/915/#230-915-05-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:14.518Z to 2026-09-09T23:12:14.518Z Record version: sha256:8360a57fe0d298a0fc7de5ef116fdb47d1e28db02ac3d775e1cc30307d79f12b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-10](https://asc.understandingaccounting.org/updates/asu-2014-10/). Source downloaded (UTC): 2026-09-09T23:12:17.521Z to 2026-09-09T23:12:17.521Z Record version: sha256:6d9b529e5f39ca4091fe3a13238916cd056e1e22308edca96c7a70012ab34fab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-915-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/230/915/#15-scope-and-scope-exceptions) SEC content: no ##### [230-915-15-1](https://asc.understandingaccounting.org/asc/230/915/#230-915-15-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:17.521Z to 2026-09-09T23:12:17.521Z Record version: sha256:c818205a2780a2944680d4f6780ea5b8b36e5a6c11082e11d28ae6ad4fe0cc5f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-10](https://asc.understandingaccounting.org/updates/asu-2014-10/). Source downloaded (UTC): 2026-09-09T23:12:20.641Z to 2026-09-09T23:12:20.641Z Record version: sha256:bf80daccfc71ebb0d1c9b1bcb06f8014d57392beb32471eb856fa5712af96202 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-915-20: 20 Glossary [Read section](https://asc.understandingaccounting.org/asc/230/915/#20-glossary) SEC content: no Source downloaded (UTC): 2026-09-09T23:12:23.520Z to 2026-09-09T23:12:23.520Z Record version: sha256:bc3535c59d24f67f76a3e8b8a95de00cd25453af2c24649cacdacdda54ad9ffe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-915-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/230/915/#45-other-presentation-matters) SEC content: no ##### [230-915-45-1](https://asc.understandingaccounting.org/asc/230/915/#230-915-45-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:23.520Z to 2026-09-09T23:12:23.520Z Record version: sha256:c151acdd86bdeda80f560b328ff90dcfbd93cc04493630f38d7bb6100ecff11a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-10](https://asc.understandingaccounting.org/updates/asu-2014-10/). Source downloaded (UTC): 2026-09-09T23:12:25.496Z to 2026-09-09T23:12:39.302Z Record version: sha256:efe4d648afdcdc2a2eeaca1d79154df7f90a65837f082478480875649a765bd6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-920: Statement of Cash Flows — Entertainment—Broadcasters ### Machine-generated study aids ```json { "summary": "This Subtopic tells broadcasters how to classify cash paid for program license rights in the statement of cash flows. Under 230-920-45-1, cash outflows to obtain rights under a license agreement for program material are operating activities, and the amortization of the capitalized license costs is included in the reconciliation of net income to net cash flows from operating activities.", "key_points": [ "A broadcaster licensee reports cash outflows for costs incurred to obtain rights under a program material license agreement as operating activities, not investing activities (230-920-45-1).", "Amortization of capitalized license agreement costs is included in the reconciliation of net income to net cash flows from operating activities (230-920-45-1).", "The Subtopic addresses both classification of the cash outflows and presentation of the amortization of the capitalized costs (230-920-05-1).", "Scope follows the Broadcasters Overall Subtopic scope in Section 920-10-15 (230-920-15-1)." ], "categories": [ "Cash flows", "Presentation", "Industry-specific" ], "audience_level": "intermediate", "student_note": "Exam trap: program rights look like a long-lived asset purchase, so students classify the payments as investing — but GAAP requires operating classification for broadcasters, with the related amortization added back in the indirect-method reconciliation.", "related_topics": [ "920-10", "920-350", "926-230", "230-10" ], "key_concepts": [ "broadcaster licensee", "license agreement for program material", "program rights", "operating activities classification", "capitalized license costs", "amortization add-back", "indirect method reconciliation" ] } ``` Source downloaded (UTC): 2026-09-09T23:12:25.496Z to 2026-09-09T23:12:25.496Z Record version: sha256:ffd31202bf16125bc3d2fae82cd93acd84916e29f5a14a83e7243015b3c9fb11 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-920-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/230/920/#00-status) SEC content: no ##### [230-920-00-1](https://asc.understandingaccounting.org/asc/230/920/#230-920-00-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:25.496Z to 2026-09-09T23:12:25.496Z Record version: sha256:6fea0a3ff20811593cba618e64d33f4b806cbb762a60401d565ce927f07d9e92 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
BroadcasterAddedAccounting Standards Update No. 2019-0203/06/2019
License AgreementAddedAccounting Standards Update No. 2019-0203/06/2019
920-230-05-1AddedAccounting Standards Update No. 2019-0203/06/2019
920-230-15-1AddedAccounting Standards Update No. 2019-0203/06/2019
920-230-45-1AddedAccounting Standards Update No. 2019-0203/06/2019
Source downloaded (UTC): 2026-09-09T23:12:28.377Z to 2026-09-09T23:12:28.377Z Record version: sha256:848844a08ef35c5fd3b0eb9c7abf063cf979da53bcf3cdff7c84f3ab54d0fc59 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-920-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/230/920/#05-overview-and-background) SEC content: no ##### [230-920-05-1](https://asc.understandingaccounting.org/asc/230/920/#230-920-05-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:28.377Z to 2026-09-09T23:12:28.377Z Record version: sha256:7609ce49b1ff0041affe8467c3ccea259f911eccd927fd274dbff3ee7d21aecb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance to a [broadcaster](https://asc.understandingaccounting.org/glossary/b/#broadcaster "An entity or an affiliated group of entities that transmits radio or television program material.") licensee on the classification in the statement of cash flows of certain costs incurred for the rights acquired under a [license agreement](https://asc.understandingaccounting.org/glossary/l/#license-agreement "A typical license agreement for program material (for example, features, specials, series, or cartoons) covers several programs (a package) and grants a television station, group of stations, network, pay television, or cable television system (licensee) the right to broadcast either a specified number or an unlimited number of showings over a maximum period of time (license period) for a specified fee.") for program material. This Subtopic also provides guidance for presenting the amortization of the capitalized costs of license agreements. Source downloaded (UTC): 2026-09-09T23:12:32.330Z to 2026-09-09T23:12:32.330Z Record version: sha256:383b243ef370dd8c550700bcef6582939548f9107c8d69e6a6c79be850673596 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-920-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/230/920/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [230-920-15-1](https://asc.understandingaccounting.org/asc/230/920/#230-920-15-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:32.330Z to 2026-09-09T23:12:32.330Z Record version: sha256:6906b3106b853845582ad4311ea98f972c102531ec05a5411aae55be0cdda584 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 920-10-15. Source downloaded (UTC): 2026-09-09T23:12:39.302Z to 2026-09-09T23:12:39.302Z Record version: sha256:47f95383a55e8a056e89256fab1c56a9fd469db7a4b203ab452728dd1213258c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-920-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/230/920/#45-other-presentation-matters) SEC content: no #### Reporting Cash Flows ##### [230-920-45-1](https://asc.understandingaccounting.org/asc/230/920/#230-920-45-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:39.302Z to 2026-09-09T23:12:39.302Z Record version: sha256:1ac5da43a9a474ffe561ae6a476cb6ff9f68f9db088c11d7c388ac1704c8fa80 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [broadcaster](https://asc.understandingaccounting.org/glossary/b/#broadcaster "An entity or an affiliated group of entities that transmits radio or television program material.") licensee shall report cash outflows for the costs incurred to obtain the rights acquired under a [license agreement](https://asc.understandingaccounting.org/glossary/l/#license-agreement "A typical license agreement for program material (for example, features, specials, series, or cartoons) covers several programs (a package) and grants a television station, group of stations, network, pay television, or cable television system (licensee) the right to broadcast either a specified number or an unlimited number of showings over a maximum period of time (license period) for a specified fee.") for program material as operating activities in the statement of cash flows, and it shall include the amortization of the capitalized costs of license agreements for program material in the reconciliation of net income to net cash flows from operating activities. Source downloaded (UTC): 2026-09-09T23:12:42.609Z to 2026-09-09T23:12:53.235Z Record version: sha256:c6e7f9d35f9e218a83acbbf820f2f8b7a5d363e649cf8d1b0131a808b088bf24 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-926: Statement of Cash Flows — Entertainment—Films ### Machine-generated study aids ```json { "summary": "This Subtopic tells film production and distribution entities how to classify certain film-related cash flows in the statement of cash flows. Cash outflows for film costs, participation costs, exploitation costs, and manufacturing costs are operating activities—not investing—even though film costs are capitalized as assets. Amortization of film costs is added back in the reconciliation of net income to net cash flows from operating activities.", "key_points": [ "The Subtopic addresses classification of costs incurred to produce and market films and presentation of film cost amortization in the statement of cash flows (230-926-05-1).", "Scope follows the Entertainment—Films Overall Subtopic scope in Section 926-10-15 (230-926-15-1).", "Cash outflows for film costs, participation costs, exploitation costs, and manufacturing costs are reported as operating activities (230-926-45-1).", "Amortization of film costs is included in the reconciliation of net income to net cash flows from operating activities (230-926-45-1)." ], "categories": [ "Presentation", "Cash flows", "Industry-specific" ], "audience_level": "intermediate", "student_note": "The common misunderstanding is assuming that because film costs are capitalized as long-lived assets, the related cash outflows belong in investing activities; ASC 230-926-45-1 requires operating classification, with amortization added back under the indirect method.", "related_topics": [ "926-10", "926-20", "230-10" ], "key_concepts": [ "film costs", "participation costs", "exploitation costs", "manufacturing costs", "operating activities classification", "amortization add-back", "indirect method reconciliation" ] } ``` Source downloaded (UTC): 2026-09-09T23:12:42.609Z to 2026-09-09T23:12:42.609Z Record version: sha256:905f553411b12f69258a4f82540c168f869253cbdf0ab6ccc8d2e71bad1a6c2f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-926-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/230/926/#05-overview-and-background) SEC content: no ##### [230-926-05-1](https://asc.understandingaccounting.org/asc/230/926/#230-926-05-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:42.609Z to 2026-09-09T23:12:42.609Z Record version: sha256:1418db07249830a82853849df8b7e8103491a87fbf827751e4b961307ce6aa5e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance to entities in the film production and distribution industry on the classification in the statement of cash flows of certain costs incurred to produce and [market](https://asc.understandingaccounting.org/glossary/m/#market "A distribution channel within a certain territory. Examples of markets include theatrical exhibition, home video, pay television, free television, and the licensing of film-related products.") [films](https://asc.understandingaccounting.org/glossary/f/#films "Feature films, television specials, television series, or similar products (including animated films and television programming) that are sold, licensed, or exhibited, whether produced on film, video tape, digital, or other video recording format."). This Subtopic also provides guidance for presenting the amortization of [film costs](https://asc.understandingaccounting.org/glossary/f/#film-costs "Film costs include all direct negative costs incurred in the physical production of a film, as well as allocations of production overhead and capitalized interest in accordance with Topic 835. Examples of direct negative costs include costs of story and scenario; compensation of cast, directors, producers, extras, and miscellaneous staff; costs of set construction and operations, wardrobe, and accessories; costs of sound synchronization; rental facilities on location; and postproduction costs such as music, special effects, and editing.") in the statement of cash flows. Source downloaded (UTC): 2026-09-09T23:12:44.532Z to 2026-09-09T23:12:44.532Z Record version: sha256:00ef1c0e5160148408ef1c0b7c944859fa414a56a2ad4594e137b37853063c41 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-926-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/230/926/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [230-926-15-1](https://asc.understandingaccounting.org/asc/230/926/#230-926-15-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:44.532Z to 2026-09-09T23:12:44.532Z Record version: sha256:4e790c5be0279d0dc4761a9ab63c4ba409d23cc15f0cb3042d145df4b5f36bbd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 926-10-15. Source downloaded (UTC): 2026-09-09T23:12:50.690Z to 2026-09-09T23:12:50.690Z Record version: sha256:eae589ea6d23bc1655c2ac06b7625ff983eb22b1c5846c0670f5f73fb5f41a30 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-926-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/230/926/#45-other-presentation-matters) SEC content: no #### Reporting Cash Flows ##### [230-926-45-1](https://asc.understandingaccounting.org/asc/230/926/#230-926-45-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:50.690Z to 2026-09-09T23:12:50.690Z Record version: sha256:0a074635b06b9bf8baf1cbbd15a0a7b97b970badf63ead2fe8228ed47639e60a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall report cash outflows for [film costs](https://asc.understandingaccounting.org/glossary/f/#film-costs "Film costs include all direct negative costs incurred in the physical production of a film, as well as allocations of production overhead and capitalized interest in accordance with Topic 835. Examples of direct negative costs include costs of story and scenario; compensation of cast, directors, producers, extras, and miscellaneous staff; costs of set construction and operations, wardrobe, and accessories; costs of sound synchronization; rental facilities on location; and postproduction costs such as music, special effects, and editing."), [participation costs](https://asc.understandingaccounting.org/glossary/p/#participation-costs "Parties involved in the production of a film may be compensated in part by contingent payments based on the financial results of a film pursuant to contractual formulas (participations) and by contingent amounts due under provisions of collective bargaining agreements (residuals). Such parties are collectively referred to as participants, and such costs are collectively referred to as participation costs. Participations may be given to creative talent, such as actors or writers, or to entities from whom distribution rights are licensed."), [exploitation costs](https://asc.understandingaccounting.org/glossary/e/#exploitation-costs "All direct costs (including marketing, advertising, publicity, promotion, and other distribution expenses) incurred in connection with the distribution of a film."), and manufacturing costs as operating activities in the statement of cash flows, and it shall include the amortization of film costs in the reconciliation of net income to net cash flows from operating activities. Source downloaded (UTC): 2026-09-09T23:12:57.318Z to 2026-09-09T23:13:16.461Z Record version: sha256:cf57a906ddfb76a1fe4668f902fa3c97b44e4382045b36a10bf2d1e22c769745 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-942: Statement of Cash Flows — Financial Services—Depository and Lending ### Machine-generated study aids ```json { "summary": "This Subtopic tailors the statement of cash flows to banks, savings institutions, and credit unions. Its core rule is a net-reporting exception: these institutions need not report gross cash receipts and payments for deposits placed with or withdrawn from other financial institutions, time deposits accepted and repaid, and loans made to customers and principal collections on those loans (230-942-45-1). It also requires that principal payments received under sales-type and direct financing leases be classified as investing activities (230-942-45-4) and provides a full direct-method illustration in Section 55.", "key_points": [ "Banks, savings institutions, and credit unions may report net (rather than gross) cash receipts and payments for deposits placed with and withdrawn from other financial institutions, time deposits accepted and repaid, and customer loans made and principal collected (230-942-45-1).", "When such an institution is part of a consolidated entity, the net amounts for its deposit or lending activities must be presented separately from gross amounts for other investing and financing activities of the consolidated group, including those of a non-bank subsidiary of the institution (230-942-45-2).", "Principal payments received under sales-type leases and direct financing leases are classified as investing activities (230-942-45-4).", "General cash flow presentation guidance in Section 230-10-45 continues to apply (230-942-45-3), and the scope follows 942-10-15 (230-942-15-1).", "Section 55 illustrates a direct-method statement of cash flows for a financial institution, applying 230-10-45-25 through 45-26 and 45-28 through 45-32; the level of detail shown exceeds what is required and other formats may be appropriate (230-942-55-1).", "The example shows that net reporting is elective—Financial Institution, Inc. chose to report gross receipts and payments for certificates of deposit of all maturities (230-942-55-5(f)).", "Interest paid includes amounts credited directly to demand deposit, NOW, and savings accounts, consistent with the definition of cash (230-942-55-5(m))." ], "categories": [ "Cash flows", "Presentation", "Industry-specific", "Financial statement presentation" ], "audience_level": "intermediate", "student_note": "Exam questions often test the exception itself: unlike most entities, depository institutions may net loan and deposit flows because turnover is quick and amounts are large. The common misunderstanding is thinking netting is mandatory or that it can be blended with the gross amounts of other consolidated entities—it is permissive, and in consolidation the net amounts must be shown separately.", "related_topics": [ "230-10", "942-10", "942-230", "842", "310" ], "key_concepts": [ "net reporting of cash flows", "direct method", "deposits and withdrawals", "loan originations and principal collections", "consolidated presentation", "direct financing lease principal payments", "certificates of deposit", "interest paid" ] } ``` Source downloaded (UTC): 2026-09-09T23:12:57.318Z to 2026-09-09T23:12:57.318Z Record version: sha256:49b74470af7c5fd85e20519f1522e6502d25b55d82303c4b7b365d846ca0ed82 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-942-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/230/942/#00-status) SEC content: no ##### [230-942-00-1](https://asc.understandingaccounting.org/asc/230/942/#230-942-00-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:57.318Z to 2026-09-09T23:12:57.318Z Record version: sha256:e8a396e0ad5afc3c2837bdfe00fc6af1f302db82afadbaefa2f4c517ec334ef1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
942-230-45-4AddedAccounting Standards Update No. 2019-0103/05/2019
942-230-55-2AmendedMaintenance Update 2017-06 (PDF)04/07/2017
942-230-55-2AmendedAccounting Standards Update No. 2016-1306/16/2016
942-230-55-3SupersededMaintenance Update 2017-06 (PDF)04/07/2017
942-230-55-4AmendedAccounting Standards Update No. 2016-1306/16/2016
Source downloaded (UTC): 2026-09-09T23:12:59.455Z to 2026-09-09T23:12:59.455Z Record version: sha256:5e7f6305e2a33f87e2988bfe4d7279ee902d7a936f1e22c8dab153ed9cb54988 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-942-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/230/942/#05-overview-and-background) SEC content: no ##### [230-942-05-1](https://asc.understandingaccounting.org/asc/230/942/#230-942-05-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:12:59.455Z to 2026-09-09T23:12:59.455Z Record version: sha256:c380323028050d85cd82752ab38aa99ac487a54ae2d1229919c66c4a1e6f73ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses the reporting of cash receipts and payments by financial institutions in the cash flow statement. It provides an illustration of the statement of cash flows under the direct method for a financial institution. Source downloaded (UTC): 2026-09-09T23:13:02.885Z to 2026-09-09T23:13:02.885Z Record version: sha256:e30be56c1e733a29d7343b7abab5b107971f9ad0ae3b3acfc2ada5133dcddf4a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-942-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/230/942/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [230-942-15-1](https://asc.understandingaccounting.org/asc/230/942/#230-942-15-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:02.885Z to 2026-09-09T23:13:02.885Z Record version: sha256:76eae14ea5bef19faccec8544067d53f186df0e1d7919f7aa826747571ece18d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 942-10-15. Source downloaded (UTC): 2026-09-09T23:13:09.821Z to 2026-09-09T23:13:09.821Z Record version: sha256:6631ae9a69b3764cd6ff957a99a04504ea5359657a01ba9f8ab93d54d4386f88 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-942-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/230/942/#45-other-presentation-matters) SEC content: no ##### [230-942-45-1](https://asc.understandingaccounting.org/asc/230/942/#230-942-45-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:09.821Z to 2026-09-09T23:13:09.821Z Record version: sha256:835a0e897e079e392d47097e391392ded46425fa961b79686680afd4e4efd517 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Banks, savings institutions, and credit unions are not required to report gross amounts of cash receipts and cash payments for any of the following: 1. a Deposits placed with other financial institutions and withdrawals of deposits 2. b Time deposits accepted and repayments of deposits 3. c Loans made to customers and principal collections of loans. ##### [230-942-45-2](https://asc.understandingaccounting.org/asc/230/942/#230-942-45-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:09.821Z to 2026-09-09T23:13:09.821Z Record version: sha256:a49010e3717e23537a8375cabf8a9ccb1dc21cd3f5992a389560220e7257e969 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When those entities constitute part of a consolidated entity, net amounts of cash receipts and cash payments for deposit or lending activities of those entities shall be reported separate from gross amounts of cash receipts and cash payments for other investing and financing activities of the consolidated entity, including those of a subsidiary of a bank, savings institution, or credit union that is not itself a bank, savings institution, or credit union. ##### [230-942-45-3](https://asc.understandingaccounting.org/asc/230/942/#230-942-45-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:09.821Z to 2026-09-09T23:13:09.821Z Record version: sha256:980ac3c19331c59ff1c974b96f064aa37f61d8d86e0977441a7bcdc19136ce5e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Section 230-10-45 for additional presentation guidance. ##### [230-942-45-4](https://asc.understandingaccounting.org/asc/230/942/#230-942-45-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:09.821Z to 2026-09-09T23:13:09.821Z Record version: sha256:31d990b181043ec9468f73e445b41b6a7f31e4f0416b66298b610d15d7081def Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entities within the scope of this Subtopic shall classify principal payments received under sales-type leases and direct financing leases within investing activities. 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. Source downloaded (UTC): 2026-09-09T23:13:18.198Z to 2026-09-09T23:13:26.841Z Record version: sha256:bc1a50da729ab59405fff18571e76f6fdfa41457fbd94469885efd425bde1b17 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-946: Statement of Cash Flows — Financial Services—Investment Companies ### Machine-generated study aids ```json { "summary": "This subtopic applies the statement of cash flows requirements to investment companies and points to the narrow exemption that lets certain investment companies omit the statement entirely. It also identifies noncash investing and financing activities peculiar to investment companies — notably reinvested dividends and distributions — that must be disclosed.", "key_points": [ "The subtopic governs statements of cash flows for investment companies and the circumstances in which such an entity is exempt from presenting one (230-946-05-1).", "Scope follows the investment company scope in Section 946-10-15 (230-946-15-1).", "The conditions for exemption from providing a statement of cash flows are set out in paragraph 230-10-15-4, not in this subtopic itself (230-946-45-1).", "Reinvestments of dividends and distributions are examples of noncash investing and financing activities that must be disclosed under paragraphs 230-10-50-3 through 50-4 (230-946-55-1)." ], "categories": [ "Presentation", "Cash flows", "Industry-specific", "Disclosure" ], "audience_level": "intermediate", "student_note": "Investment companies are one of the few entities that can skip the statement of cash flows, but only if every condition in 230-10-15-4 is met — students often assume the exemption is automatic for any fund, when it is conditional and must be tested each period. Even when exempt-analysis is done, noncash items like dividend reinvestments still require disclosure.", "related_topics": [ "230-10", "946-10", "946-205", "946-305" ], "key_concepts": [ "investment company", "statement of cash flows exemption", "noncash investing and financing activities", "reinvested dividends and distributions", "highly liquid investments", "supplemental cash flow disclosure" ] } ``` Source downloaded (UTC): 2026-09-09T23:13:18.198Z to 2026-09-09T23:13:18.198Z Record version: sha256:842058215f7fa9b1e2e76bb0f1cc902df420aa487a03d89ba03cdcc0b62ec2c7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-946-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/230/946/#05-overview-and-background) SEC content: no ##### [230-946-05-1](https://asc.understandingaccounting.org/asc/230/946/#230-946-05-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:18.198Z to 2026-09-09T23:13:18.198Z Record version: sha256:beee85627245310b7ed80ac693f6f954aad674cac3321f0b4c1a27f1ba0e01f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses statements of cash flows for investment companies, as well as the circumstances under which an investment company would be exempt from the presentation of statements of cash flows. Source downloaded (UTC): 2026-09-09T23:13:20.843Z to 2026-09-09T23:13:20.843Z Record version: sha256:0af78ce9e0a82ac89f6df4af2f1707156dc3da28394428dad198eb0699c8350d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-946-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/230/946/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [230-946-15-1](https://asc.understandingaccounting.org/asc/230/946/#230-946-15-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:20.843Z to 2026-09-09T23:13:20.843Z Record version: sha256:1abbbed5cabe1ae590a6a7f8620e88eb21c7dfc9f902fe4c08120433b2c892d2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 946-10-15. Source downloaded (UTC): 2026-09-09T23:13:22.734Z to 2026-09-09T23:13:22.734Z Record version: sha256:849a5eecac50626d3e3a0f60e6c4e520e17e452421fd843303b69760005f29b6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-946-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/230/946/#45-other-presentation-matters) SEC content: no ##### [230-946-45-1](https://asc.understandingaccounting.org/asc/230/946/#230-946-45-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:22.734Z to 2026-09-09T23:13:22.734Z Record version: sha256:75210adbce780c810f376c4da1386ef891c5994a13e9b5f47a993fd8c4e9a364 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [230-10-15-4](https://asc.understandingaccounting.org/asc/230/10/#230-10-15-4) specifies conditions under which an investment company is exempt from the requirements to provide a statement of cash flows. Source downloaded (UTC): 2026-09-09T23:13:26.841Z to 2026-09-09T23:13:26.841Z Record version: sha256:e1d8f777f45ee1dd575e5409ea2852eb543431c8f57e71931bd2bc077d586c1f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-946-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/230/946/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [230-946-55-1](https://asc.understandingaccounting.org/asc/230/946/#230-946-55-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:26.841Z to 2026-09-09T23:13:26.841Z Record version: sha256:966a2d86d1ab62c5fda355336acb5babc30e1fa547d5c057f24e04b4a74d8c89 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples of noncash investing and financing activities of investment companies that paragraphs [230-10-50-3 through 50-4](https://asc.understandingaccounting.org/asc/230/10/#230-10-50-3) require be disclosed include reinvestments of dividends and distributions. Source downloaded (UTC): 2026-09-09T23:13:28.515Z to 2026-09-09T23:13:43.817Z Record version: sha256:d1e8e6956e37dd87fb4740ebd981d5627fa25d4308821d7d4bd8b18164b5e776 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-958: Statement of Cash Flows — Not-for-Profit Entities ### Machine-generated study aids ```json { "summary": "This subtopic provides implementation guidance for how not-for-profit entities (NFPs) prepare a statement of cash flows under Topic 230. It addresses when otherwise-qualifying short-term investments cannot be treated as cash equivalents because of donor restrictions, how donor-restricted contributions for long-term purposes must be reclassified as financing inflows, and how agency transactions, noncash contributions, and collection items are reported.", "key_points": [ "Assets meeting the definition of cash equivalents are not cash equivalents for an NFP if restrictions prevent that classification—for example, short-term highly liquid investments purchased with resources carrying donor-imposed restrictions limiting their use to long-term investment (230-958-55-2).", "Cash received with a donor-imposed restriction limiting its use to long-term purposes (per 958-210-45-6) must be presented as a financing cash inflow under 230-10-45-14(c), so under the indirect method an adjustment to the change in net assets is required to reconcile to net cash flows from operating activities (230-958-55-3).", "This reclassification also applies to cash receipts from the sale of donated financial assets or crypto assets under Subtopic 350-60 that upon receipt were directed without NFP-imposed limitations for sale and converted nearly immediately into cash (230-958-55-3; 230-10-45-21A).", "Cash received and paid in agency transactions is reported as operating activities, and under the indirect method may be reported either gross or net (230-958-55-4).", "Noncash investing and financing activities—such as contributions of buildings, securities, or recognized collection items—must be separately disclosed under 230-10-50-3 (230-958-55-5).", "Cash flows from purchases, sales, and insurance recoveries of unrecognized, noncapitalized collection items are reported as investing activities (230-958-55-5A).", "Illustrations of both the direct and indirect methods for NFP operating cash flows appear in 958-205-55-18 through 55-20, based on facts in 958-205-55-5 (230-958-55-6)." ], "categories": [ "Presentation", "Cash flows", "Not-for-profit", "Disclosure" ], "audience_level": "intermediate", "student_note": "Exam questions love the trap that a donor-restricted contribution for endowment or plant is a financing inflow, not operating—and that donor-restricted short-term liquid investments are not cash equivalents even though they look like them. Remember agency transactions run through operating (gross or net under the indirect method), while unrecognized, noncapitalized collection item transactions run through investing.", "related_topics": [ "230-10", "958-205", "958-210", "958-605", "350-60" ], "key_concepts": [ "statement of cash flows", "cash equivalents", "donor-imposed restrictions", "financing activities", "agency transactions", "noncash investing and financing activities", "collection items", "indirect method" ] } ``` Source downloaded (UTC): 2026-09-09T23:13:28.515Z to 2026-09-09T23:13:28.515Z Record version: sha256:db150714ea0870fef05161160d9c1b30f04de96fa2c4b59aafc63fcdaebcedcf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-958-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/230/958/#00-status) SEC content: no ##### [230-958-00-1](https://asc.understandingaccounting.org/asc/230/958/#230-958-00-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:28.515Z to 2026-09-09T23:13:28.515Z Record version: sha256:86bb942a8f37f537485af8594bdbaaf88d6d2da8c5b475325fc80529f7250607 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Agency TransactionAddedAccounting Standards Update No. 2015-1006/12/2015
Agency Transactions (Not for Profits)SupersededAccounting Standards Update No. 2015-1006/12/2015
Conditional ContributionAddedAccounting Standards Update No. 2018-0806/21/2018
ContributionAmendedAccounting Standards Update No. 2018-0806/21/2018
ContributionAmendedAccounting Standards Update No. 2010-0701/28/2010
Donor-Imposed ConditionAddedAccounting Standards Update No. 2018-0806/21/2018
Donor-Imposed RestrictionAmendedAccounting Standards Update No. 2016-1408/18/2016
Financial Asset (1st def.)SupersededAccounting Standards Update No. 2016-1912/14/2016
Financial Asset (1st def.)AddedAccounting Standards Update No. 2012-0510/22/2012
Financial Asset (2nd def.)AddedAccounting Standards Update No. 2016-1912/14/2016
Promise to GiveAddedAccounting Standards Update No. 2018-0806/21/2018
958-230-55-3AmendedAccounting Standards Update No. 2023-0812/13/2023
958-230-55-3AmendedAccounting Standards Update No. 2016-1912/14/2016
958-230-55-3AmendedAccounting Standards Update No. 2016-1811/17/2016
958-230-55-3AmendedAccounting Standards Update No. 2012-0510/22/2012
958-230-55-4AmendedAccounting Standards Update No. 2015-1006/12/2015
Source downloaded (UTC): 2026-09-09T23:13:35.358Z to 2026-09-09T23:13:35.358Z Record version: sha256:ce7932f1432eb6b01b33eedad26aa747423f3c8dd47cc9c8a427c113fa9a8b21 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-958-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/230/958/#05-overview-and-background) SEC content: no ##### [230-958-05-1](https://asc.understandingaccounting.org/asc/230/958/#230-958-05-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:35.358Z to 2026-09-09T23:13:35.358Z Record version: sha256:4331e8ff348246cec93cf606591482f268041581822f667ab785f875b562cda1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides implementation guidance related to the statement of cash flows for [not-for-profit entities](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFPs). ##### [230-958-05-2](https://asc.understandingaccounting.org/asc/230/958/#230-958-05-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:35.358Z to 2026-09-09T23:13:35.358Z Record version: sha256:a432fb234acf471a3220e46822f608226a5724e7998f10b6770e513682342dd2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The primary purpose of a statement of cash flows is to provide relevant information about the cash receipts and cash payments of an entity during a period. Topic 230 discusses how that information helps investors, creditors, and others and establishes standards for the information to be provided in a statement of cash flows. Source downloaded (UTC): 2026-09-09T23:13:37.779Z to 2026-09-09T23:13:37.779Z Record version: sha256:83a1170cbca0da5b4a2971c35575d30383aa092fdc207014d34d4f85236902b4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-958-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/230/958/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [230-958-15-1](https://asc.understandingaccounting.org/asc/230/958/#230-958-15-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:37.779Z to 2026-09-09T23:13:37.779Z Record version: sha256:20ac207a04cd43c1d7127c3fd2452f487cb9d326f4630592f67d569aacbb2b4b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 958-10-15. Source downloaded (UTC): 2026-09-09T23:13:43.817Z to 2026-09-09T23:13:43.817Z Record version: sha256:9460a4476632786fba4b43ee7f6f00fa00c960065c31c9835363efdf2b2b1a75 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-958-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/230/958/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [230-958-55-1](https://asc.understandingaccounting.org/asc/230/958/#230-958-55-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:43.817Z to 2026-09-09T23:13:43.817Z Record version: sha256:ea82180d8360ed5c4fbb90448645dcb1d5b369cdcd6070923d0fbccade59514a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section, which is an integral part of the requirements of this Subtopic, provides general guidance to be used by [not-for-profit entities](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFPs) in the preparation of a statement of cash flows. ##### [230-958-55-2](https://asc.understandingaccounting.org/asc/230/958/#230-958-55-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:43.817Z to 2026-09-09T23:13:43.817Z Record version: sha256:0b3ebffc3f8ccbe4187282183d90f33ead3fa14e8291882f23202665c68dd087 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Not all assets of NFPs that meet the definition of [cash equivalents](https://asc.understandingaccounting.org/glossary/c/#cash-equivalents "Cash equivalents are short-term, highly liquid investments that have both of the following characteristics: Readily convertible to known amounts of cash So near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less qualify under that definition. Original maturity means original maturity to the entity holding the investment. For example, both a three-month U.S. Treasury bill and a three-year U.S. Treasury note purchased three months from maturity qualify as cash equivalents. However, a Treasury note purchased three years ago does not become a cash equivalent when its remaining maturity is three months. Examples of items commonly considered to be cash equivalents are Treasury bills, commercial paper, money market funds, and federal funds sold (for an entity with banking operations).") are cash equivalents for purposes of preparing statements of financial position and cash flows. Restrictions can prevent them from being included as cash equivalents even if they otherwise qualify. For example, short-term highly liquid investments are not cash equivalents if they are purchased with resources that have donor-imposed restrictions that limit their use to long-term investment. ##### [230-958-55-3](https://asc.understandingaccounting.org/asc/230/958/#230-958-55-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:43.817Z to 2026-09-09T23:13:43.817Z Record version: sha256:ffca6002a3d4e341df2154c7e92dbcfa281f526c001680820fd229c1aaa0a68a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When an NFP reports cash received (or cash receipts from the sale of donated [financial assets](https://asc.understandingaccounting.org/glossary/f/#financial-asset "Cash, evidence of an ownership interest in an entity, or a contract that conveys to one entity a right to do either of the following: Receive cash or another financial instrument from a second entity Exchange other financial instruments on potentially favorable terms with the second entity.") or crypto assets accounted for in accordance with Subtopic 350-60 that upon receipt were directed without any NFP-imposed limitations for sale and were converted nearly immediately into cash as discussed in paragraph [230-10-45-21A](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-21A)) with a [donor-imposed restriction](https://asc.understandingaccounting.org/glossary/d/#donor-imposed-restriction "A donor stipulation (donors include other types of contributors, including makers of certain grants) that specifies a use for a contributed asset that is more specific than broad limits resulting from the following: The nature of the not-for-profit entity (NFP) The environment in which it operates The purposes specified in its articles of incorporation or bylaws or comparable documents for an unincorporated association. Some donors impose restrictions that are temporary in nature, for example, stipulating that resources be used after a specified date, for particular programs or services, or to acquire buildings or equipment. Other donors impose restrictions that are perpetual in nature, for example, stipulating that resources be maintained in perpetuity. Laws may extend those limits to investment returns from those resources and to other enhancements (diminishments) of those resources. Thus, those laws extend donor-imposed restrictions.") that limits its use to long-term purposes in conformity with paragraph [958-210-45-6](https://asc.understandingaccounting.org/asc/210/958/#210-958-45-6), an adjustment to the change in net assets to reconcile to net cash flows from operating activities is necessary when using the indirect method of reporting cash flows in order to present those cash receipts as cash inflows from financing activities as required by paragraph [230-10-45-14(c)](https://asc.understandingaccounting.org/asc/230/10/#230-10-45-14). ##### [230-958-55-4](https://asc.understandingaccounting.org/asc/230/958/#230-958-55-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:43.817Z to 2026-09-09T23:13:43.817Z Record version: sha256:d6088e48b4ab939e9eb61b4060f4fb6033c59d218105dcee44d94a94b15be017 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cash received and paid in [agency transactions](https://asc.understandingaccounting.org/glossary/a/#agency-transaction "A type of exchange transaction in which the reporting entity acts as an agent, trustee, or intermediary for another party that may be a donor or donee.") shall be reported as cash flows from operating activities in a statement of cash flows. If the statement of cash flows is presented using the indirect method, cash received and paid in such transactions is permitted to be reported either gross or net. ##### [230-958-55-5](https://asc.understandingaccounting.org/asc/230/958/#230-958-55-5) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:43.817Z to 2026-09-09T23:13:43.817Z Record version: sha256:e22ea1a8b33e09343fb31a2da36d3cc008eedb0c391120e453e5f1454e995d13 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Separate disclosure of noncash investing and financing activities (for example, receiving contributions of buildings, securities, or recognized collection items) is required by paragraph [230-10-50-3](https://asc.understandingaccounting.org/asc/230/10/#230-10-50-3). ##### [230-958-55-5A](https://asc.understandingaccounting.org/asc/230/958/#230-958-55-5A) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:43.817Z to 2026-09-09T23:13:43.817Z Record version: sha256:8dbe40ca447207648e22300aaa12b1831ee491ec9be129bc0b750f39ad6420e8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cash flows from purchases, sales, and insurance recoveries of unrecognized, noncapitalized collection items shall be reported as investing activities in a statement of cash flows. #### Illustrations ##### [230-958-55-6](https://asc.understandingaccounting.org/asc/230/958/#230-958-55-6) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:43.817Z to 2026-09-09T23:13:43.817Z Record version: sha256:270a18a7c5bd3c674e5f41d7b83f942de923018343dcb3895edf17b0cf8ead87 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Guidance in paragraphs [958-205-55-18 through 55-20](https://asc.understandingaccounting.org/asc/205/958/#205-958-55-18) illustrates both the direct and indirect methods of reporting cash flows from operating activities in a statement of cash flows. Paragraph [958-205-55-5](https://asc.understandingaccounting.org/asc/205/958/#205-958-55-5) provides the facts and transactions that are reflected in those illustrative statements. Source downloaded (UTC): 2026-09-09T23:13:47.405Z to 2026-09-09T23:13:52.062Z Record version: sha256:0a06965a3baffac8c52bf3cfb1bcc48d94e3f122977ef8968a35a158045ec62e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-970: Statement of Cash Flows — Real Estate—General ### Machine-generated study aids ```json { "summary": "This Subtopic addresses how a real estate entity classifies cash payments to purchase real estate in the statement of cash flows. Real estate is generally a productive asset, so its purchase is an investing cash outflow; but if a developer acquires real estate specifically for resale (to be subdivided, improved, and sold in lots), the payment is an operating cash flow because the property is akin to inventory.", "key_points": [ "This Subtopic provides cash flow classification guidance regarding cash payments to purchase real estate (230-970-05-1).", "The Topic 230 definitions of operating and investing activities are flexible enough to accommodate assets that are generally productive assets but in certain cases are inventory (230-970-45-1).", "A cash payment to purchase real estate is generally an investing cash outflow because real estate is generally a productive asset (230-970-45-1).", "If a real estate developer acquires real estate to be subdivided, improved, and sold in individual lots, the purchase payment is classified as an operating cash flow because the real estate is acquired specifically for resale and is similar to inventory (230-970-45-1).", "The scope of this Subtopic follows the Overall Real Estate Subtopic scope in Section 970-10-15 (230-970-15-1)." ], "categories": [ "Cash flows", "Presentation", "Inventory and PP&E", "Industry-specific" ], "audience_level": "intermediate", "student_note": "Classic exam trap: students reflexively call every real estate purchase an investing outflow, but intent governs — a developer buying lots for resale reports operating outflows, which materially changes reported operating cash flow.", "related_topics": [ "230-10", "970-10", "970-360", "330-10" ], "key_concepts": [ "operating activities", "investing activities", "productive asset", "real estate held for resale", "inventory classification", "cash flow classification", "real estate developer" ] } ``` Source downloaded (UTC): 2026-09-09T23:13:47.405Z to 2026-09-09T23:13:47.405Z Record version: sha256:abcb28a04c9f97b380951ca8960f2c94fdf712270f3e465e7c6b38b5473b43da Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-970-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/230/970/#05-overview-and-background) SEC content: no ##### [230-970-05-1](https://asc.understandingaccounting.org/asc/230/970/#230-970-05-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:47.405Z to 2026-09-09T23:13:47.405Z Record version: sha256:cfb9d572676fd51b3cb7e0833d729f5c6e93cd0e589d2f3d3bf77d52065f53fa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides cash flow classification guidance regarding cash payments to purchase real estate. Source downloaded (UTC): 2026-09-09T23:13:50.355Z to 2026-09-09T23:13:50.355Z Record version: sha256:7f649f8a779d0255478a883cc8ae2b0cb95e71244618d994014f80ec20ff623d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-970-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/230/970/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [230-970-15-1](https://asc.understandingaccounting.org/asc/230/970/#230-970-15-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:50.355Z to 2026-09-09T23:13:50.355Z Record version: sha256:8c1d83aeee86431a1eb3e257b61d720ca6f0c9d6697ab6f6566b53d41133bea3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 970-10-15. Source downloaded (UTC): 2026-09-09T23:13:52.062Z to 2026-09-09T23:13:52.062Z Record version: sha256:593b64dee1c28c412cf66f1983620cc88dd89da8f398f6770518312f88ad9172 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-970-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/230/970/#45-other-presentation-matters) SEC content: no ##### [230-970-45-1](https://asc.understandingaccounting.org/asc/230/970/#230-970-45-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:52.062Z to 2026-09-09T23:13:52.062Z Record version: sha256:4894bf6c76b911883625c6be1c2d827f8d6d5b88667e68dd0d93a260f0ee4fe3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The definitions of operating and investing activities in Topic 230 provide flexibility for the appropriate classification of cash receipts and payments for assets that generally are productive assets but in certain cases may be inventory. For example, real estate generally is considered a productive asset, and a cash payment to purchase real estate generally is an investing cash outflow. However, if real estate is acquired by a real estate developer to be subdivided, improved, and sold in individual lots, then the cash payment to purchase that real estate would be classified as an operating cash flow because the real estate is acquired specifically for resale and is similar to inventory in other businesses. Source downloaded (UTC): 2026-09-09T23:13:54.837Z to 2026-09-09T23:14:06.654Z Record version: sha256:1a04aebfe97f286e6a977483d5bc1394ddc27a721aaaf44ac8a9938495e7ee19 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-978: Statement of Cash Flows — Real Estate—Time-Sharing Activities ### Machine-generated study aids ```json { "summary": "This subtopic governs how entities engaged in real estate time-sharing activities classify cash flows related to time-sharing notes receivable. The core rule is that all changes in time-sharing notes receivable — including cash received from selling those notes — are reported as operating activities in the statement of cash flows (230-978-45-1), rather than as investing or financing activities.", "key_points": [ "The subtopic addresses cash flow presentation for real estate time-sharing transactions (230-978-05-1).", "Its scope follows Section 978-10-15, the scope of the Real Estate—Time-Sharing Activities Overall Subtopic (230-978-15-1).", "Changes in time-sharing notes receivable are reported as cash flows from operating activities (230-978-45-1).", "Sales of time-sharing notes receivable are likewise classified as operating cash flows, not investing or financing (230-978-45-1)." ], "categories": [ "Cash flows", "Presentation", "Industry-specific", "Financial statement presentation" ], "audience_level": "intermediate", "student_note": "This is a short industry-specific override worth remembering: the intuitive answer — that notes receivable are investing activities and their sale is a financing/investing inflow — is wrong for time-share sellers, because the notes arise from the entity's core revenue-generating sales activity. Expect a classification question that tests whether you apply the general ASC 230 rules or this exception.", "related_topics": [ "230-10", "978-10", "978-310", "860-10", "976-10" ], "key_concepts": [ "time-sharing notes receivable", "operating activities classification", "statement of cash flows", "real estate time-sharing transactions", "sales of receivables", "industry-specific cash flow guidance" ] } ``` Source downloaded (UTC): 2026-09-09T23:13:54.837Z to 2026-09-09T23:13:54.837Z Record version: sha256:34c7365cef4b61843191c1d67265a9063ddee6a932aef45d4a052a125a39ab2c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-978-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/230/978/#00-status) SEC content: no ##### [230-978-00-1](https://asc.understandingaccounting.org/asc/230/978/#230-978-00-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:54.837Z to 2026-09-09T23:13:54.837Z Record version: sha256:e8bbe2ae02b3a9f8a88b62738143422d0f5ef2edebe189cfd1b086e044a9b84d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Time-SharingAmendedAccounting Standards Update No. 2014-0603/14/2014
Undivided Interest (2nd def.)SupersededAccounting Standards Update No. 2014-0603/14/2014
Source downloaded (UTC): 2026-09-09T23:13:57.323Z to 2026-09-09T23:13:57.323Z Record version: sha256:209d8da8c1023938384fe325944301b5e65b44d046334a351459af6e726773ea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-978-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/230/978/#05-overview-and-background) SEC content: no ##### [230-978-05-1](https://asc.understandingaccounting.org/asc/230/978/#230-978-05-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:13:57.323Z to 2026-09-09T23:13:57.323Z Record version: sha256:7b79ebf431a44810bd2f3350a6af7654fcf890ca58279deae694b4a1cd505f84 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses cash flow presentation matters for real estate [time-sharing](https://asc.understandingaccounting.org/glossary/t/#time-sharing "An arrangement in which a seller sells or conveys the right to occupy a dwelling unit for specified periods in the future. Forms of time-sharing arrangements include but are not limited to fixed and floating time, interval ownership, undivided interests, points programs, vacation clubs, right-to-use arrangements such as tenancy-for-years arrangements, and arrangements involving special-purpose entities. In this context, an undivided interest is a time-sharing arrangement that involves a tenant-in-common interest in a condominium unit or entire improved property, and in which the interest holder is assigned a specific period (generally, a specific week). The interest holder is also assigned a specific unit if the undivided interest is in the entire improved property.") transactions. Source downloaded (UTC): 2026-09-09T23:14:00.235Z to 2026-09-09T23:14:00.235Z Record version: sha256:26f6697fc185c6e64a8ece90d8b7f404f4976f0ea56a1a424613eae72011d899 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-978-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/230/978/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [230-978-15-1](https://asc.understandingaccounting.org/asc/230/978/#230-978-15-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:14:00.235Z to 2026-09-09T23:14:00.235Z Record version: sha256:a30bcf93262f5bd2e9f4525bf0418b1f625ade555d78661cbc4602db68e274e5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 978-10-15. Source downloaded (UTC): 2026-09-09T23:14:06.654Z to 2026-09-09T23:14:06.654Z Record version: sha256:488916902df5467880bc3ba1df715a59617d6caf3de3bc5847ab65e8da91a099 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 230-978-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/230/978/#45-other-presentation-matters) SEC content: no ##### [230-978-45-1](https://asc.understandingaccounting.org/asc/230/978/#230-978-45-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:14:06.654Z to 2026-09-09T23:14:06.654Z Record version: sha256:2422dc58b4b84f986c3eb0bf4f97644fda2289a55e2cd6132d84eed6d8f1ddd1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Changes in [time-sharing](https://asc.understandingaccounting.org/glossary/t/#time-sharing "An arrangement in which a seller sells or conveys the right to occupy a dwelling unit for specified periods in the future. Forms of time-sharing arrangements include but are not limited to fixed and floating time, interval ownership, undivided interests, points programs, vacation clubs, right-to-use arrangements such as tenancy-for-years arrangements, and arrangements involving special-purpose entities. In this context, an undivided interest is a time-sharing arrangement that involves a tenant-in-common interest in a condominium unit or entire improved property, and in which the interest holder is assigned a specific period (generally, a specific week). The interest holder is also assigned a specific unit if the undivided interest is in the entire improved property.") notes receivable, including sales of the notes, shall be reported in the statement of cash flows as cash flows from operating activities.