Question

Oriole Corporation had the following balances in its accounting records at August 31, 2018: Restricted cash for bank as a compensating balance Cheque dated September 15, 2018 from Alters Inc. U.S. bank account with an equivalent balance of $12,200 Canadian Savings account balance Customer cheque dated January 28, 2018 Treasury bill (60 day terms) Bank overdraft in chequing account $38,700 5,350 12,200 29,500 1,800 26,300 10,300 What amount should Oriole report as cash and cash equivalents at August 31? Cash and cash equivalents s

Answer 1

Answer 2

Compute the cash and cash equivalent as follows: Particulars Amount U.S. Bank Account S12.200 Savings account balance $29,500 Treasury bills $26,300 Cash and cash equivalent $68,000 However as per IFRS, the amount of bank overdraft can be deducted from cash and cash equivalent, which will reduce balance by $10300. Cash and cash equivalent as per IFRS will be $57700. Cash equivalents are short term commitments that can be easily converted into a known cash amount. Post-dated cheques and restricted cash are not included in cash and cash equivalent. Moreover, the cheque received on Jan 28, 2018 and not yet deposited might be a stale cheque as 180 days have passed since Jan 28, 2018. Thus, it has not been included.