Klein Corp.acquired land by issuing its common stock.How should this transaction be disclosed when a statement of cash flows is prepared?
A)It should be disclosed in a supplemental schedule of noncash investing and financing activities or in a note.
B)The acquisition of land should be reported as an investing activity and the issuance of the stock as a financing activity.
C)It should be included in a printout of the general ledger Common Stock account with the statement of cash flows.
D)The transaction does not need to be disclosed.

Question

Quizplus · Accepted Answer

The acquisition of land by issuing common stock is a noncash transaction that affects investing and financing activities but does not involve cash flows. Therefore, it should be disclosed in a supplemental schedule of noncash investing and financing activities or in a note to the financial statements, not in the main body of the statement of cash flows.