On the statement of cash flows, a hybrid financial instrument should be:
A)Reported as an operating activity
B)Reported as an investing activity
C)Reported as a financial activity
D)Reported according to its individual components

Question

Quizplus · Accepted Answer

Hybrid financial instruments, which contain characteristics of both debt (financial) and equity (investing), should be reported on the statement of cash flows according to their individual components. This approach allows for a more accurate reflection of the nature of the cash flows associated with these complex instruments.

On the Statement of Cash Flows, a Hybrid Financial Instrument