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20 August, 13:41

Mint Co.'s cash balance in its balance sheet is $1,300,000, of which $300,000 is identified as a compensating balance. Additionally, Mint has classified cash of $250,000 that has been restricted for future expansion plans as "other assets." Which of the following should Mint disclose in notes to its financial statements? Compensating | Restricted | Balance | Cash |A. No | YesB. Yes | YesC. No | NoD. Yes | No

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  1. 20 August, 14:57
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    Correct option is B Yes and Yes

    Yes - Compensating shall be reported, And Restricted shall also be reported.

    Explanation:

    Compensating balance is the minimum balance to be maintained in the company's bank account as this is used by bank for offsetting loan, and used by company to set up the loan amount.

    Restricted balance is a choice made by the company to not use the funds and use it later for company's growth or future projected, but still since it cannot be used it shall also be reported accordingly.

    Therefore the company has the need to report such restricted balance also and compensating balance has to be reported as well.

    Therefore correct option is B

    Yes - Compensating shall be reported, And Restricted shall also be reported.
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Home » Business » Mint Co.'s cash balance in its balance sheet is $1,300,000, of which $300,000 is identified as a compensating balance. Additionally, Mint has classified cash of $250,000 that has been restricted for future expansion plans as "other assets.
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