A purchase of land in exchange for a long-term note payable must be disclosed as a noncash investing and financing activity.

Question

Quizplus · Accepted Answer

When land is purchased in exchange for a long-term note payable, it is considered a noncash investing and financing activity and must be disclosed as such in the financial statements. This is because the transaction does not involve the exchange of cash, but instead the exchange of a long-term note payable, which is a form of financing.

A Purchase of Land in Exchange for a Long-Term Note