SOCPA Shares its Comments on IFRS Interpretations Committee's Tentative Decision Regarding (IAS7)

The IFRS Interpretations Committee has requested comments on its tentative decision about whether an entity should include a demand deposit as a component of cash and cash equivalents in its statements of cash flows and financial position when the demand deposit is subject to contractual restrictions on use agreed with a third party. 

SOCPA agreed with the decision of the Committee that such amounts are considered to be cash in accordance with IAS No. 7, since such restrictions by third parties do not change the nature of the cash and do not prevent the entity from accessing such cash, even when their use in other than the agreed upon purposes would result in a breach of the terms of the agreement with the other parties. However, the entity should take into account the requirements of IAS No. 1 in relation to putting those restricted amounts in a separate item in the statement of financial position. The entity should also consider whether the restriction is for a short period or for a period of more than twelve months, which may lead to putting restricted cash with non-current assets.

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