[Anonymous]

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

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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

B.

$30,000

C.

$80,000

D.

$180,000

Answer 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.

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It says that for government accounting, as long as the maturity per the entity is 3 months or less, it is considered a cash equivalent. I.e. For the 3 year note, the original maturity is > 3 months, but this question counts it as cash equivalent because for Hill City the date of purchase and the maturity date is < 3 months. Is that also true for GAAP?