[YouCanDoIt]

I would really appreciate some help on this concept. From doing other non-govt. ?’s, I figured that “Cash & Cash Equivalents” regarding notes/t-bills –> ONLY considered cash equivalent IF the original maturity is 3 months or Less.

However, under government ?, it’s saying to include the 3-year note under cash equivalent as well, because the due date is within 3 months.

Am I correct in assuming that this is how it would work for all GOVT and NON-GOVT situations? What am I missing here..

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Hill City’s water utility fund held the following investments in U.S. Treasury securities at June 30, 20X3:

Date Maturity Carrying
Investment Purchased Date Amount
————— ——— ——– ———
3-month T-bill 5/31/X3 7/31/X3 $ 30,000
3-year T-note 6/15/X3 8/31/X3 50,000
5-year T-note 10/1/X0 9/30/X5 100,000
In the fund’s balance sheet, what amount of these investments should be reported as cash and cash equivalents at June 30, 20X3?

A.
$0

Incorrect B.
$30,000

C.
$80,000

D.
$180,000

You answered B. The correct answer is C.

The water utility fund of Hill City would report the 3-month T-bill ($30,000) and the 3-year T-note ($50,000) as cash and cash equivalents. GASB 2450.106 notes that investments with original maturities, to the entity holding the investment, of three months or less, generally qualify as cash equivalents. The 3-year T-note was purchased on 6/15/X3 and matures on 8/31/X3; therefore, it was purchased by Hill City within three months from maturity and can be considered a cash equivalent.

FAR: 76
REG: Currently studying
AUD:
BEC:

[hashbrown]

You are correct, only considered cash equivalent if the original maturity is 3 months or less.

3-year T-note 6/15/X3 8/31/X3 50,000

Purchase date is 06/15/X3 and the maturity date is 08/31/X3. The original maturity to the purchaser is 3 months or less.

[YouCanDoIt]

thank you @hashbrown,
so, if we were doing this for a regular business organization, then the answer would be $30,000 (?)

FAR: 76
REG: Currently studying
AUD:
BEC:

[Author]

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