An asset (land) was purchased and payment in full was made by issuing the company's common shares. No cash was paid. Therefore, this transaction should be reported on the Statement of Cash Flows:
A) as an "Adjustment to reconcile net income to operating activities."
B) should not be reported on the Statement of Cash Flows but details explained in the disclosure notes.
C) as an outflow of cash.
D) as a non-cash exchange.

Question

Quizplus · Accepted Answer

This transaction involves no actual cash movement since the asset was acquired in exchange for the company's common shares. Therefore, it does not appear on the Statement of Cash Flows, which tracks cash inflows and outflows. Instead, the details of such non-cash transactions are disclosed in the notes accompanying the financial statements to provide a complete picture of the company's financial activities.

An Asset (Land) Was Purchased and Payment in Full Was