To Be Classified as a Cash Equivalent, the Only Criterion

question 222

True/False

To be classified as a cash equivalent, the only criterion an item must meet is that it must be readily convertible to a known amount of cash.

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Definitions:

Consideration Transferred

The total amount of cash, assets, or other resources given up by an acquiring entity to obtain control of another business in a business combination.

Fair Value

The monetary amount anticipated for the disposal of an asset or the fee for shifting a liability in a coordinated marketplace interaction on the appraisal day.

Bargain Purchase

The acquisition of an asset or company at a price significantly below its fair market value.

AASB 3

The Australian Accounting Standards Board's standard on Business Combinations, which provides the guidelines for accounting for the acquisition of businesses.