During 2014,Larson Corp.acquired buildings for $325,000,paying $75,000 cash and signing a 10% mortgage note payable in 10 years for the balance.How should the transaction be shown in the cash flow statement for Larson in 2014?

Question

Quizplus · Accepted Answer

The transaction should be shown as a $75,000 reduction in cash flows from investing activities because this is the amount of cash paid for the buildings. The mortgage note payable is a financing activity, but it does not affect cash flow in this transaction.