RSM220H1 Lecture 7: Week 7 Cash and Receivables
Document Summary
Types of accounts receivable: trade, loan, nontrade. Interest, advances to employees: from derivatives and swaps. Must consider cost of discount: monitor outstanding accounts receivable to. Minimize stress on working capital and related bank debt. Generally immaterial and reported with rest of cash. Separately disclosed if material: either short-term or long-term asset depending on date of availability/expected disbursement, should not be reported as current if restrictions prevent it from being used as current asset. Compensating balances: some lenders require minimum cash balance maintained, foreign currencies. Converted to cad at exchange rate on date of statement of financial position. Reported as restricted if restriction on capital out of a country: in severe cases, foreign balances do not qualify for recognition as assets, bank overdrafts. Should not be offset against cash unless there is available cash in another account at the same bank. Rsm220 page 1 same bank: cash equivalents.
