Buck’s Dilemma: Gross or Net?
Solution 1 — Classification with the Statement of Cash Flows
Buck should present the borrowing and payment activity as a cash flow from financing activities.
ASC 230-10-45-14 states that “proceeds from issuing bonds, mortgages, notes, and from other
short- or long-term borrowing” are a cash inflow from financing activities. Similarly, ASC 230-
10-45-15 states that “repayments of amounts borrowed” are a cash outflow for financing
activities.
Solution 2 — Gross versus net presentation
Scenario 1
Net presentation is appropriate. Buck may classify the activity as a $50 million net cash inflow
