Examples of transactions that must be disclosed as noncash investing and financing activities include:
A) The conversion of debt securities to equity securities.
B) The purchase of long-term assets financed by a cash down payment and a note payable to the seller for the balance.
C) The leasing of assets in a transaction that qualifies as a finance lease.
D) The purchase of noncash assets in exchange for equity or debt securities.
E) All of these answers are correct.

Question

Quizplus · Accepted Answer

All of these transactions involve noncash investing and financing activities, which must be disclosed in the financial statements. The conversion of debt securities to equity, purchase of long-term assets using a note payable, leasing assets under a finance lease, and purchasing noncash assets in exchange for equity or debt securities are all examples of transactions that affect the company's financial position but do not involve the use of cash. Therefore, they must be disclosed separately in the notes to the financial statements.

Examples of Transactions That Must Be Disclosed as Noncash Investing