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The emphasis in the statement of cash flows is on gross cash receipts and payments, and, with limited exceptions, most investing and financing activities must be presented gross. For instance, reporting the net change in bonds payable would obscure the financing activities of the entity by not disclosing separately cash inflows from issuing bonds and cash outflows from retiring bonds.

In a few circumstances, netting of cash flows is allowed. The items must have these characteristics:

 Quick turnovers,

 Large amounts, and

 Short maturities (maturities of three months or less).(ASC 230‐10‐45‐8)

Net reporting for the following assets and liabilities is allowed provided the original maturity is three months or less:

1 Investments (other than cash equivalents),

2 Loans receivable, and

3 Debts.

For this purpose, due on demand amounts are considered to have maturities three months or less. Also, credit card receivables of financial services operations are considered loans with maturities of three months or less when at the cardholders option:

 The amount charged may be paid in full when first billed,

 The payment is usually due within one month without interest, and

 The charges are not from the entity's sale of goods or services.(ASC 230‐10‐45‐9)

Classification of Cash Receipts and Disbursements The statement of cash flows requires classification of cash receipts and cash disbursements into three categories:

1 Investing activities

2 Financing activities

3 Operating activities(ASC 230‐10‐45‐10)

These classifications allow users to evaluate significant relationships and among the activities and to understand the cash flow effects of major activities and to identify trends. (ASC 230‐10‐10‐2) These classifications mirror the order of the statement of cash flows. That is, the operating activities section appears first with the investing and financing activities following.

Operating Activities Operating activities include all transactions and other events that are not defined as investing or financing activities. Operating activities generally involve producing and delivering goods and providing services. (ASC 230‐10‐20)

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. (ASC 230‐10‐20)

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. (ASC 230‐10‐20)

Following is a list of the classifications of cash inflows and outflows within the statement of cash flows.

Operating Activities—Cash Inflows

 Receipts from sale of goods or services.

 Returns on loans, other debt instruments of other entities, and equity securities (interest and dividends).

 All other cash receipts not from inventory or financing activities.(ASC 230‐10‐45‐16)

 Receipts from sales of other securities and other assets if acquired for resale and carried at fair value in a trading account.(ASC 230‐10‐45‐20)

 Receipts from acquisitions and sales of loans acquired specifically for resale and carried at fair value at the lower of amortized cost basis or fair value. (ASC 230‐10‐45‐21)

 Not‐for‐profits' sale of donated financial assets that on receipt had no donor‐imposed limitations on sale and were converted immediately into cash.(ASC 230‐10‐45‐21A)

 For lessors––cash receipts from lease payments from leases classified as sales‐type, direct financing, or operating leases.(ASC 842‐30‐45‐5 and 45‐7)

Operating Activities—Cash Outflows

 Payments for inventory.

 Payments to employees and other suppliers for goods and services.

 Payments to government for taxes, duties, fines, and other fees or penalties.

 Payments of interest, including interest portion of settlement of zero coupon debt instruments and those with relatively insignificant interest rates.

 Payments of asset retirement obligations.

 Cash 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, less any amounts paid soon after the acquisition date to settle the contingent consideration liability.

 All other cash payments that do not stem from transactions defined as investing or financing activities, such as payments to settle lawsuits, cash contributions to charities, and cash refunds to customers.(ASC 230‐10‐45‐17)

 Cash payments for purchase of other securities and assets acquired specifically for resale carried at fair value in a trading account.(ASC 230‐10‐45‐20)

 Cash payments for loans acquired specifically for resale and carried at fair value or at the lower of amortized cost basis or fair value.(ASC 230‐10‐45‐21)

 For lessees:Payments for the interest portion of the lease liability from a finance lease.Payments from operating leases, except to the extent that those payments represent costs to bring another asset for its intended use.Variable lease payments and short‐term payments not included in the lease liability.(ASC 842‐20‐45‐5b‐d)

Investing Activities—Cash Inflows

 Cash flows from purchases, sales, and maturities of available‐for‐sale debt securities, reported gross. (ASC 230‐10‐45‐11)

 Receipts from collections or sales of loans and sales of other entities' debt instruments except, for cash equivalents and certain debt instruments acquired specifically for resale, and donated debt instruments received by not‐for‐profit entities per ASC 230‐10‐45‐21A.

 Receipts from collections on a transferor's beneficial interest in the securitization of the transferor's trade receivables.

 Receipts from sales of equity instruments, held in available‐for‐sale or held‐to‐maturity portfolios, of other enterprises and from returns on investments on those instruments.

 Receipts from donated debt instruments received from NFPs and from returns of investment in those instruments.

 Receipts from sales of property, plant, and equipment and other productive assets, including directly related proceeds from insurance settlements.

 Receipts from sales of loans not specifically acquired for resale, including specifically acquired for directly related proceeds from insurance settlements.

 Receipts from proceeds of insurance settlements directly related to the sale or disposal of loans, debt or equity investments, or property, plant, or equipment.(ASC 230‐10‐45‐12)

 Cash received as proceeds from the settlement of corporate‐owned life insurance policies (COLI), including bank‐owned life insurance (BOLI).(ASC 230‐10‐45‐21C)

Investing Activities—Cash Outflows

 Payments for loans made.

 Payments for acquisitions of other entities' debt instruments other than cash equivalents and certain debt instruments acquired for resale.

 Payments to purchase equity of other enterprises instruments, other than certain instruments carried in a trading account.

 Payments at the time of purchase, or soon before or after, of property, plant, and equipment and other productive assets, including interest capitalized as part of the cost of those assets.

 Contingent consideration payments by an acquirer made soon after an acquisition's consummation date in a business combination.(ASC 230‐10‐45‐13)

Financing Activities—Cash Inflows

 Proceeds from issuing equity instruments.

 Proceeds from issuing debt (short‐term or long‐term), including bonds, mortgages, and notes.

 Not‐for‐profits' cash receipts contributions and investment income that are donor‐restricted for long‐term purposes or for increasing a donor‐restricted endowment fund.

 Proceeds from derivative instruments that include, at inception, financing elements. The proceeds may be received at inception or over the term of the instrument. Not included are a financing element inherently included in an at‐the‐market derivative instrument.(ASC 230‐10‐45‐14)

 Cash receipts from the sale of donated financial assets restricted to a long‐term purchase.(ASC 230‐10‐45‐21A)

Financing Activities—Cash Outflows

 Payment of dividends or other distributions to owners, including for repurchase of entity's stock.

 Cash paid to a tax authority when a grantor is withholding shares from a grantee's award for tax‐withholding purposes is considered an outlay to reacquire the entity's equity instruments.

 Repayment of debt principal, including payment of principle of zero coupon or relatively insignificant interest rate debt instruments.

 Other payments to creditors for long‐term credit.

 Distributions, to counterparties of derivative instruments that include financing elements at inception. These may be received at inception or over the term of the instrument. Not included are a financing element inherently included in an at‐the‐market derivative instrument with no prepayments.

 Payments for debt issue costs.

 Contingent payments up to the amount of the original contingent consideration liability by an acquirer made after three months an acquisition's consummation date in a business combination.

 Payments from debt prepayment.

 Payments from debt extinguishment costs.(ASC 230‐10‐45‐15)

 For lessee: repayments for the principal portion of the lease liability from a financing lease.(ASC 842‐20‐45‐5a)