As of December 31, 2014, Bajac Inc. has the following balances: Cash in bank, $1
ID: 2457458 • Letter: A
Question
As of December 31, 2014, Bajac Inc. has the following balances: Cash in bank, $110,000; Investment in preferred shares (retractable, purchased by Bajac within 90 days of maturity date), $122,000; Investment in common shares (to be sold within 30 days); and Cash (legally restricted for an upcoming long-term debt retirement), $250,000.
Determine the December 31, 2014 cash and cash equivalents amount for the 2014 statement of cash flows under IFRS.
(The answer is $110 000 under ASPE, I just don't know the answer under IFRS due to the differences)
Explanation / Answer
Under IFRS, preferred shares acquired within a short period of their maturity (3 months or less) and with a specified redemption date are treated as cash equivalents. Therefore, under IFRS, the December 31, 2014 cash and cash equivalents amount for the 2014 statement of cash flows will be $232,000 ($110,000 + $122,000).
Investment in common stock and restricted cash will not be considered under the category cash and cash equivalents.
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