Classification of Accrued Interest on Short-Term Fixed and Flexi Deposits Under Ind AS
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- Last Updated on 12 November, 2024
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Cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. For an investment to qualify as a cash equivalent it must be readily convertible to a known amount of cash and be subject to an insignificant risk of changes in value. Therefore, an investment normally qualifies as a cash equivalent only when it has a short maturity of, say, three months or less from the date of acquisition
In this story, we have discussed the appropriate accounting treatment for a company engaged in infrastructure projects, which currently classifies its Flexi and Fixed Deposits with maturities of three months or less, along with the accrued interest, as cash and cash equivalents.
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