The Financial Accounting Standards Board's Emerging Issues Task Force has proposed an accounting standards update for how certain cash receipts and cash payments would be classified on the statement of cash flows. Various stakeholders have told FASB that there is some diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The proposed ASU addresses eight specific issues to reduce that diversity in practice. For example, FASB acknowledged there is no specific guidance on the classification of cash payments for debt prepayment or extinguishment costs. Under the update, cash payments for debt prepayment or extinguishment costs would be classified as cash outflows for financing activities.
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