Michael's Industries purchased some land in exchange for 1,000 shares of Michael's voting common stock with a market value of $15 each.How will this transaction be reported on the statement of cash flows?
A)As a non-cash investing and financing transaction
B)As a non-cash financing transaction
C)As a non-cash investing transaction
D)As a use of cash in the investing section and a source of financing in the financing section

Question

Quizplus · Accepted Answer

This transaction involves acquiring an asset (land) without the use of cash, and it is financed through the issuance of common stock. Therefore, it is considered both an investing and financing activity but does not involve cash flows, making it a non-cash investing and financing transaction.

Michael's Industries Purchased Some Land in Exchange for 1,000 Shares