Change to Restricted Cash in the Statement of Cash Flows
By Elyssa Burgess, CPA, Senior Manager

If your entity holds any restricted cash or restricted cash equivalents, you probably know that current GAAP guidance is silent on how these items should be treated on the statement of cash flows. 

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To eliminate the diversity in practice caused by this silence, the FASB released an Accounting Standards Update (ASU) that outlines the proper presentation on the statement of cash flows and the required disclosures in the notes to the financial statements.

What’s included in the Statement of Cash Flows?

The statement of cash flows should include the balances of all cash, cash equivalents, restricted cash, and restricted cash equivalents.  Transfers of cash and cash equivalents between the restricted and unrestricted classifications should not be presented on the statement of cash flows.

What’s included in the notes to the financial statements?

• The nature and amount of any restricted cash or cash equivalents
• If cash, cash equivalents, restricted cash, and restricted cash equivalents are presented separately on the balance sheet, include a table or narrative that reconciles the disaggregated balance sheet amounts to the total used in the statement of cash flows (entities have the option of including this in the statement of cash flows)

When is the ASU effective and how should it be implemented?

The ASU is effective for all public entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, it is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted.

The ASU should be applied retrospectively for all periods presented.



Elyssa Burgess, CPA, Senior Associate