Start networking and exchanging professional insights

Register now or log in to join your professional community.

Follow

According to IAS 7; An entity purchases a building and the seller accepts payment partly in equity shares and partly in debentures of the entity?

This transaction should be treated in the statement of cash flows as follows:

 

a. The purchase of the building should be investing cash outflow and the issuance of shares and the debentures financing cash outflows.

b. The purchase of the building should be investing cash outflow and the issuance of debentures as financing cash outflows while the issuanceof shares as investing cash outflow.

c. This does not belong in a cash flow statement and should be disclosed only in the footnotes to the financial statements.

d. Ignore the transaction totally since it is a noncash transaction. No mention is required in either the cash flow statement or anywhere else inthe financial statements.

user-image
Question added by Fathi Matbaq , Senior Purchasing Officer , Alghanim Industries
Date Posted: 2016/03/24
Mursal Warsame
by Mursal Warsame , fiannce officer , Mursal Freelancer

The purchase of an office building by issuing long-term notes payable should be reported as a

Frank Mwansa
by Frank Mwansa , ACCOUNTING LECTURER , FREELANCER

C is the correct answer . cash flow statement involves the movement of cash.

More Questions Like This