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Deloitte Alert on money market funds

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26 Oct 2008

As a result of recent market events, a number of 'money market funds' (mutual funds that invest primarily or exclusively in short-term debt securities designed to maintain a constant monetary value) have incurred losses on their investments.

Some of these funds have experienced declines in fair value as a result of deterioration in the creditworthiness of their assets, general illiquidity conditions, or both, and redemptions by investors have increased. Accordingly, some funds have been forced to liquidate their assets, impose limits on redemptions, or obtain support from related entities. This Financial Reporting Alert 08-17 (PDF 47k) from Deloitte (United States) addresses the investor's accounting for money market funds that were appropriately classified as cash equivalents and that have subsequently imposed restrictions on redemptions or have been frozen. Accounting considerations discussed include balance sheet classification, measurement, and classification in the statement of cash flows.


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