Elkwood Corporation acquired a land site with a building by issuing a 30-year mortgage payable. In Elkwood's statement of cash flows, this transaction should be shown
A) only as a cash flow from investing activity for the purchase of the land and building.
B) only as a cash flow from financing activity for the issuance of the mortgage payable.
C) in the schedule of noncash investing and financing transactions.
D) as both a cash flow from investing activity and a cash flow from financing activity.

Question

Quizplus · Accepted Answer

This transaction involves acquiring an asset by issuing a mortgage, which is a noncash transaction. Therefore, it should be reported in the schedule of noncash investing and financing transactions.

Elkwood Corporation Acquired a Land Site with a Building by Issuing