FAR - Cash and Notes Receivable

Question 1

When a non interest bearing note is exchange for property and neither the note nor the property has a clearly determined exchange price, how should the note be recorded on the balance sheet?

Answer 1

it should be recorded at the PV of the future payments

Question 2

what is considered cash and cash equivalent?

1. petty cash
2. marketable security debt
3. marketable security equity
4. depository account

Answer 2

1. petty cash - yes
2. marketable security debt - no
3. marketable security equity - no
4. depository account - yes

Question 3

What should be reported as cash and cash equivalent as of June 30, Y5:

3 month T Bill - purchased 5/31/Yr 5, matures 7/31/Yr 5, $ 30,000

3 year T Note - purchased 6/15/Yr 5, matures 8/31/Yr 5, $ 50,000

5 year T Note - purchased 10/1/Yr 1, matures 9/30/Yr 6, $ 100,000

Answer 3

$80K should be reported as cash and cash equivalent b/c the 3-month T-bill and the 3-year T-note are highly liquid and mature within 3 months of ACQUISITION by the holder