A company acquired some land (independently appraised at $12,000)and paid for it by issuing 1,000 shares of its common stock (par $10 per share;no market price was quoted).How should this be reported on the statement of cash flows?
A)Report $12,000 as inflow and outflow of cash.
B)Report $12,000 as an inflow of cash.
C)The transaction should not be reported on the statement of cash flows.
D)Report in a schedule of significant noncash investing and financing activities.

Question

Quizplus · Accepted Answer

This transaction involves a noncash investing activity (issuing common stock) to acquire the land. Therefore, it should be reported in a schedule of significant noncash investing and financing activities in the statement of cash flows.

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