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    Is a CD Listed as a Cash Equivalent on the Balance Sheet?

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    On the issue of cash equivalent you buy a CD with 9 month maturity on June 1. It is now Dec 31, and you are compiling your balance sheet. Since that CD only has 2 months left before it matures, does it qualify to be shown as a Cash Equivalent (essentially as cash)?

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    Solution Preview

    We have two main choices when classifying an asset on the balance sheet. We can classify the asset as a current asset or a long-term asset. Because the maturity is less than one year, we know that the CD must be classified as a current asset. We can now take this one step ...

    Solution Summary

    This solution explains if a CD that was purchased in June and reaches maturity nine months later should be shown as a cash equivalent on the December 31st balance sheet.