A company acquired some land, which had been independently appraised at $12,000, and paid for it by issuing 1,000 shares of its common shares. The shares had a par value of $10 per share and no market price was available. 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) Should not be reported on the statement of cash ﬂows.
D) Report on a schedule of signiﬁcant noncash transactions if it is material.

Question

Quizplus · Accepted Answer

This transaction is a noncash transaction since the land was acquired by issuing shares rather than using cash. It should be reported on a schedule of significant noncash transactions if it is material.

A Company Acquired Some Land, Which Had Been Independently Appraised