Intermediate Accounting 14th Edition

Published by Wiley
ISBN 10: 0470587237
ISBN 13: 978-0-47058-723-2

Chapter 7 - Cash and Receivables - Questions - Page 405: 22

Answer

Because the restricted cash is not used by Woodlawn Racetrack to meet current obligations, it should not be reported as a current asset but under investments or other assets.

Work Step by Step

Thus, although this item has cash in its label, it should not be reflected in liquidity measures, such as current ratios.
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