Joanne M. Flood - Wiley GAAP - Financial Statement Disclosure Manual

A consolidated statement of cash flows must be presented when a complete set of consolidated financial statements is issued. The consolidated statement of cash flows would be the last statement to be prepared, as the information to prepare it will come from the other consolidated statements (consolidated statement of financial position, income statement, and statement of retained earnings). The preparation of a consolidated statement of cash flows involves the same analysis and procedures as the statement for an individual entity with a few additional items. When the indirect method is used, the additional noncash transactions relating to the business combination, such as the differential amortization, must also be reversed, and all transfers to affiliates must be eliminated, as they do not represent cash inflows or outflows of the consolidated entity.

All unrealized intercompany profits should have been eliminated in preparation of the other statements. Any income or loss allocated to noncontrolling parties would need to be added back, as it would have been eliminated in computing consolidated net income but does not represent a true cash outflow or inflow. Finally, only dividend payments that are not intercompany should be recorded as cash outflows in the financing activities section.

In preparing the operating activities section of the statement by the indirect method following a purchase business combination, the changes in assets and liabilities related to operations since acquisition should be derived by comparing the consolidated statement of financial position as of the date of acquisition with the year‐end consolidated statement of financial position. These changes will be combined with those for the acquiring company up to the date of acquisition as adjustments to net income. The effects due to the acquisition of these assets and liabilities are reported under investing activities.

The company considers all investments with original maturities of three months or less when purchased to be cash equivalents.

Cash and cash equivalents consist of cash on hand and other highly liquid investments that are unrestricted as to withdrawal or use, and which have an original maturity of three months or less when purchased. The Company maintains cash and cash equivalents with various financial institutions in the United States. As of June 30, 2018, and 2017, a cash balance of $84,865 and $46,279, respectively, was maintained at U.S. financial institutions and were insured by the Federal Deposit Insurance Corporation or other programs subject to certain limitations.

Restricted CashAt June 30, 20X8, Best Foods had on deposit approximately $20,000 securing a lease bond for one of its properties. The cash securing the bond is restricted from access or withdrawal so long as the bend remains in place.

Restricted CashRestricted cash includes cash balances that are legally or contractually restricted to use. The Company's restricted cash as of July 31, 20X6, included proceeds that were placed in escrow in connection with the sale of a restaurant. See Note 3.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the consolidated statements of cash flows.

1 Authoritative LiteratureSubtopic Scope Disclosure Techniques Parenthetical Explanations Example—Parenthetical Explanations Notes to Financial Statements Example—Internal Reference to Note Cross‐References Example—Cross‐References to Other Line Items Valuation Allowances or Contra Accounts Example—Valuation Allowances or Contra Accounts

2 Practice Alert FASB Initiative SEC Initiative Suggestions for Improving Disclosure Effectiveness

3 Disclosure Requirements

4 Disclosure ExamplesAccounting Period Example 7.1: Fiscal Period Example 7.2: Change in Fiscal Year‐End Accounts Receivable Example 7.3: Receivables and Allowances for Doubtful Accounts and Composition of Other Receivables Example 7.4: Accounts Receivable, Including Amounts of Allowance Accounts Advertising Example 7.5: Marketing and Advertising ExpensesMarketing and advertising expenditures are expensed in the annual period in which the expenditure is incurred. Example 7.6: Advertising Expenses and Promotional Costs Cash Equivalents Example 7.7: Cash Equivalents Example 7.8: Cash Equivalents—No Cash Equivalents Comprehensive Income Example 7.9: Comprehensive Income (Loss) Concentrations of Risk Example 7.10: Concentration of Risk Example 7.11: Concentration of Risk Consolidation Policy Example 7.12: Basis of Presentation and Basis of Consolidation: Combined Note Example 7.13: Basis of Consolidation with Detail Example 7.14: Basis of Consolidation, Including a VIE Example 7.15: Noncontrolling Interest Contingencies Example 7.16: Contingencies Derivatives Example 7.17: Convertible Notes Payable and Derivative Instruments Earnings Per Share Example 7.18: Earnings (Loss) Per Share Example 7.19: Loss per Common Share Use of Estimates Example 7.20: Use of Estimates and Assumptions Financial Instruments Example 7.21: Fair Value of Financial Instruments Example 7.22: Derivative Financial Instruments Foreign Currency Transactions Example 7.23: Foreign Currency Transactions and Comprehensive Income Income Taxes Example 7.24: Taxation, Including Tax Cuts and Jobs Act Disclosure Example 7.25: Taxation Intangible Assets Example 7.26: Intangible Assets, Net Example 7.27: Goodwill Example 7.28: Goodwill and Intangible Assets Example 7.29: Software Development Costs Inventories Example 7.30: Inventories and Cost Method Example 7.40: Inventories—Merchandise Inventories Property and Equipment and Depreciation Methods Example 7.41: Property and Equipment, Net, Straight‐Line Depreciation Method and Impairment Policy Example 7.42: Property and Equipment, Net, Declining Balance Depreciation Method Example 7.43: Long‐lived Assets—Impairment or Disposal Nature of Operations Example 7.44: Nature of Operations Revenue Example 7.45: Revenue Recognition under ASC 606 with Effects of Adoption of ASU 2014‐09 Example 7.46: Revenue Recognition under ASC 606, Including Policies Regarding Performance Obligations, Estimated Returns, Shipping Fees, and Gift Cards Recent Accounting Pronouncements Example 7.47: Recent Accounting Pronouncements Example 7.48: Recent Accounting Pronouncements Example 7.49: Recently Adopted Accounting Pronouncements Example 7.50: Recently Issued Adopted Pronouncements Risks and Uncertainties Example 7.51: Risks and Uncertainties Stock‐Based Compensation Example 7.52: Stock‐Based Compensation Example 7.53: Stock‐Based Compensation