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Lesson 21, Topic 3

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🎥+✏️Balance Sheet: The Assets🟢

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Balance Sheet Part 2 Download

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Krithika Karthik 19 March 2024

Hi Prof,
Can you please clarify why Restricted cash is shown under current asset Since cannot be useful in short term ?

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1. Deleted User 23 March 2024
  
  Hello Krithika,
  
  Restricted cash can be classified as either a current or non-current asset depending on the nature and timing of the restriction.
  
  Current Asset: If the restriction on the cash will be lifted within the operating cycle of the business or within one year from the reporting date (whichever is longer), then it would be classified as a current asset.
  
  Non-Current Asset: If the restriction on the cash is expected to last beyond the operating cycle or one year from the reporting date, then it would be classified as a non-current asset.
  
  For example, if cash is set aside in a separate account for a specific purpose, such as fulfilling a long-term contractual obligation or a loan covenant, and the restriction is expected to last for more than a year, it would be classified as a non-current asset. However, if the restriction is temporary and expected to be lifted within a year, it would be classified as a current asset.
  
  Hope this makes sense !
  
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Roselin 26 March 2024

Hi Professor,
Doesn’t US GAAP require the amounts to be at historical cost rather than fair value?

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1. Deleted User 31 March 2024
  
  Hello Roselin,
  
  Under U.S. Generally Accepted Accounting Principles (GAAP), the choice between historical cost and fair value measurement depends on the specific accounting standard and the nature of the asset or liability being measured.
  
  Historical cost is the original cost of an asset or liability recorded when it was acquired or incurred. However, fair value is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
  
  While historical cost is commonly used for certain assets (like property, plant, and equipment), fair value measurement is increasingly used in many areas of accounting, especially for financial instruments and certain investments.
  
  So, while historical cost is still prevalent in some areas of accounting under U.S. GAAP, fair value measurement is also widely accepted and applied where appropriate, especially when it provides more relevant and reliable information about the financial position and performance of an entity.
  
  Hope this makes sense !
  
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Djokovic Nadal Avengers 26 November 2024

Hi Professor, thanks for the video. It will be nice if you could post the videos on 1080p or at-least 720p. Hard to see the numbers

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1. Maroun, CPA 27 November 2024
  
  Hello Djokovic,
  
  Thank you for your feedback! We completely understand how important video quality is, especially when reviewing detailed numbers. We’re currently in the process of gradually updating all videos to higher resolutions to enhance clarity.
  We appreciate your patience and understanding as we work on these improvements!
  
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Haydar Majeed 14 May 2025

Hi Professor,
I was wondering how can we record investment such as stocks using fair value since the price in constant fluctuation. However, using historical value, i.e., the purchase price is more feasible. Thank you.

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1. Maroun, CPA 16 May 2025
  
  Hello Haydar,
  
  Under U.S. GAAP, nearly all equity securities are required to be measured at fair value, with changes reported as unrealized gains and losses in earnings. The day-to-day price swings can make “fair value” sound impractical at first glance. In practice, however, we don’t update the books every minute. We mark the investment to its fair value only at each official reporting date (month-end, quarter-end, or year-end), using the closing price from the primary exchange on that date.
  Thus, while historical cost is easier, fair-value measurement gives investors and creditors a clearer, timelier picture of how the investment is really performing.
  
  Hope that helps!
  
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Leilani K 28 May 2025

Aren’t assets held for speculation short term assets?
Or are they classified as either short term or long term depending on when we expect to sell them?

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Rohit Saran 12 December 2025

Would debt investments classified as AFS be considered current asset or non-current asset? HFT debt securities should be current and AFS could be current or non-current based on Maturity, correct?

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1. Maroun, CPA 14 December 2025
  
  Hello Rohit,
  
  Yes, your understanding is right.
  
  • Trading (HFT) debt securities → always reported as current assets, because they’re bought with the intent to sell in the near term.
  • Available-for-sale (AFS) debt securities → can be current or noncurrent, depending on management’s intent and ability and the expected holding period (often linked to whether they’ll be sold within a year/operating cycle).
  
  Thus, an AFS bond that the company expects to hold for several years is shown as noncurrent; an AFS bond that will be sold in the next year should be classified as current.
  
  I hope this helps!
  
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PATIENCE OFORI 27 January 2026

Please, I don’t quite get where the “Notes numbers” being referred to in the entire balance sheep part 2 audio is being taken from

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1. Maroun, CPA 28 January 2026
  
  Hello Patience,
  
  The “Note #” references are not taken from the balance sheet numbers, and they are not account numbers. They are simply cross-references to the footnotes (Notes to the Financial Statements).
  
  For example:
  – Cash and Cash Equivalents (Note 5) → tells you to read Note 5, which explains what qualifies as a cash equivalent (e.g., original maturity of 3 months or less).
  – Inventory (Note 6) → means: “If you want details about Inventory, go read Note 6.”
  And right below the balance sheet, you can see Note 6 explaining the inventory policy (FIFO) and measurement (lower of cost and net realizable value).
  
  Same idea for:
  – Restricted Cash (Note 8)
  – A/R (Note 7)
  – Income taxes receivable (Note 10)
  
  In real financial statements, the notes are usually shown in a separate “Notes” section after the statements. In our lecture slides, we embedded the note text under the balance sheet line to make the cross-reference easier to follow.
  
  Hope this makes sense!
  
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