Intermediate Accounting 3 The Balance Sheet and Statement of Changes in Stockholders Equi valuation methods The present value of an asset is the net amount of future cash inflows into which the asset is expected to be converted less the present value of future cash outflows necessary to obtain those inflOWS
valuation methods The present value of an asset is the net amount of future cash inflows into which the asset is expected to be converted less the present value of future cash outflows necessary to obtain those inflows. Intermediate Accounting 3 The Balance Sheet and Statement of Changes in Stockholders’ Equity
4. Reporting classifications on the balance sheet Current(one year How to Classify Items on the or less Balance sheet? Noncurrent(more than 1 year or 1 operating cycle whichever iS longer
4. Reporting classifications on the balance sheet How to Classify Items on the Balance Sheet? ✓Current (one year or less) ✓Noncurrent (more than 1 year or 1 operating cycle, whichever is longer) Intermediate Accounting 3 The Balance Sheet and Statement of Changes in Stockholders’ Equity
Operating cycle Cash Collections Purchases Receivables Inventories ale
Receivables Cash Inventories Collections Purchases Sale s Operating Cycle Intermediate Accounting 3 The Balance Sheet and Statement of Changes in Stockholders’ Equity
Intermediate Accounting 3 The Balance Sheet and Statement of Changes in Stockholders Equi Current Assets Current assets are cash and other assets that are expected to be converted into cash. sold. or consumed within one year or the normal operating cycle, whichever is longer Cash and cash equivalent Temporary investments in marketable securities Accounts and notes receivable Inventories Prepaid items
Current assets are cash and other assets that are expected to be converted into cash, sold, or consumed within one year or the normal operating cycle, whichever is longer. Current Assets • Cash and cash equivalent • Temporary investments in marketable securities • Accounts and notes receivable • Inventories • Prepaid items Intermediate Accounting 3 The Balance Sheet and Statement of Changes in Stockholders’ Equity
Intermediate Accounting 3 The Balance Sheet and Statement of Changes in Stockholders Equi Current Assets Cash includes cash on hand and readily available in checking al savings accounts Cash equivalents are risk-free securities, such as money market funds and treasury bills that will mature in three months or less from the date acquired by the holder
Cash includes cash on hand and readily available in checking and savings accounts. Cash equivalents are risk-free securities, such as money market funds and treasury bills that will mature in three months or less from the date acquired by the holder. Current Assets Intermediate Accounting 3 The Balance Sheet and Statement of Changes in Stockholders’ Equity