ABC acquired some land (independently appraised at $12,000) and paid for it by issuing 1,000 shares of its common shares; no market price was quoted). How should this transaction be reported on the Statement of Cash Flows?
A) Reported on the face of the Statement of Cash Flows
B) Report $10,000 as a noncash investing and financing activity on the Statement of Cash Flows
C) Report the $12,000 as an inflow of cash on the Statement of Cash Flows
D) Report the $12,000 as a noncash activity in the notes to the financial statement.

Question

Quizplus · Accepted Answer

Since the land was acquired by issuing shares and not through a cash transaction, it is considered a noncash investing and financing activity. These types of transactions are not reported on the face of the Statement of Cash Flows but are disclosed in the notes to the financial statements to provide more detail about the company's investing and financing activities that did not involve cash.

ABC Acquired Some Land (Independently Appraised at $12,000) and Paid