A company purchases land using its ordinary shares. Where would this transaction appear when the company prepares the cash flow statement?
A)The purchase of land would be presented in the financing activities section as a cash payment.
B)The purchase of land would be presented in the operating activities section as a reduction in profit.
C)The purchase of land would be presented in the investing activities section as a cash payment under both methods.
D)The purchase of land would be presented in the non- cash investing and financing activities section.

Question

Quizplus · Accepted Answer

This transaction is a non-cash transaction because the company is using shares instead of cash to purchase the land, so it would be disclosed in the non-cash investing and financing activities section.

A Company Purchases Land Using Its Ordinary Shares