Cash Margins Against Letters of Guarantee
Code: 1122
👁 Views: 137
Account Information
| Financial Statement | Statement of Financial Position |
| Normal Balance | Debit |
Definition
Cash amounts held by a bank as full or partial collateral against letters of guarantee issued on behalf of the entity.
Common Journal Entries
Cash coverage for a bank guarantee (cash deposit as collateral)
Dr. Cash Collateral for Guarantees
Cr. Bank Account
📐 IFRS vs US GAAP Accounting Treatment
IFRS
IAS 7
Statement of Cash Flows
US GAAP
ASC 230
Statement of Cash Flows
❓ Frequently Asked Questions
Q: Is cash collateral for a bank guarantee considered restricted cash?
A: Yes, because the deposited cash cannot be used in operating activities while the bank guarantee is outstanding.