7.11 Assets Held for Sale
Cash and cash equivalents may be included in a
disposal group or component that is classified as an asset held for sale, regardless
of whether such an asset meets the definition of a discontinued operation (see
Section 3.3 for
additional considerations related to the presentation of discontinued operations in
the statement of cash flows). Accordingly, the “cash and cash equivalents” line item
on the balance sheet may exclude some of the entity’s cash and cash equivalents
(i.e., the portion that is included in the “assets held for sale” line item). As a
result, an entity will need to modify its normal presentation of such amounts in the
statement of cash flows. The following two methods are acceptable ways to adjust the
statement of cash flows for cash and cash equivalents included in assets held for
sale:
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Method 1 — First, (1) cash and cash equivalents included in the “assets held for sale” line item on the balance sheet at the beginning of the period are added to beginning cash presented in the statement of cash flows and (2) the corresponding amount at the end of the period is added to ending cash and cash equivalents in the statement of cash flows. Next, the adjusted amounts in the statement of cash flows are reconciled to the amounts presented on the balance sheet in a footnote.
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Method 2 — A reconciling line item is presented that shows the change in cash balances included in the assets held for sale caption after financing activities and before beginning cash balances. An entity may present the following under Method 2: