Dear all
Please help in deciding what items can be regarded as cash equivalents
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Thanks in advance!

Regards,

Lina


Cash equivalents are financial instruments that can be easily converted to cash, have high liquidity like stock of quoted companies.

Best Regards.

Alberto


 

 


Lina,

I woul suggest to take a look into IAS 7.6: Short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insgnificant risk of changes in value. Normally only an investment with a short maturity of three months or less from the date of acquisition.

Regards

Ingo


It usually includes those assets having maturity of 90 days.


Hope this would help:

 

According to IAS 7 para 6, “cash equivalents are short-term, highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes
in value…..an investment normally qualifies as a cash equivalent only when it has a short maturity of,
say, 3 months or less from the date of acquisition”.         
                   
Examples of treatment in the following cases:       
T-bills & eligible bills : Those with original maturity of 3 months or less    
Due from other banks : Those nostro accounts, call deposits, and placements/loans to banks
      with original maturity of 3 months or less    
Trading sec : Those Certificates of deposits (except for own issued) classified as
      trading with original maturity of 3 months or less  
Other s/t highly liquid sec: Those Certificates of deposits (except for own issued) classified as
     

banking with original maturity of 3 months or less

 
     

 

        r=”blue” face=”Verdana”>   

Thanks and Regards

 

Bhama


 

 

 

Cash equivalents are financial instruments that can be easily converted to cash, have high liquidity like stock of quoted companies.


Don’t forget the company will not bearing significant risk when it transfer cash equivalent to cash



 

 

 


Thank you for reply.
But I’m interested, whether  travellers cheques can be regarded as cash equivalent.

Regards, Lina


 

 
Are you the payee on the traveller cheques? If so,

A payee receiving a traveler’s cheque should follow its normal procedures for depositing cheques into its bank account: usually, endorsement by stamp or signature and listing of the cheque and its amount on the deposit slip. The bank account will be credited with the amount of the cheque as with any other negotiable item submitted for clearance.

So, at the end of the date should be considered as part of your bank account balance, which is defined as cash.
 
Hope this could be usuful,
 
Regards,
 

Rodrigo,

 

 

 


In fact, during  bank auditing I was argueing about traveller’s cheques. Im my opinion they are bright examples of cash equivalents.

* RODRIGO