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Basic Question 19 of 20
Ivex Corporation purchased a building by paying 10% of the purchase price in cash and issuing a mortgage payable to the seller for the balance. Since this transaction involves simultaneous non-cash investing (building) and financing (mortgage payable) activity, it would not appear in the body of the statement of cash flows. True or False?
User Contributed Comments 8
| User | Comment |
|---|---|
| examinee | It will appear in the footnotes but not in the statement. No? |
| synner | is it because 10% of the purchase price was paid in cash? |
| katybo | that's right |
| 3dmouse | If the company just issuea martgage payable for the whole tranaction, it still would not appear in the body of the statment of cash flows? I am guessing, the answer is false. ( correct me if i am wrong) because the body of the statement of CF includes footnote that describle any noncash investment. |
| cong | Even if a transaction is recorded in the footnote or supplementary schedule, you can still say the transaction appears on the cash flow statement . |
| rocyang | key word: "in cash" |
| Kevdharr | They paid cash so it's on the statement of cash flows. The remaining balance was bought on credit (accounts payable increased). |
| dbedford | So the portion that was paid in cash will show up on the cash flow statement the rest will show up else where |
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Learning Outcome Statements
describe the steps in the preparation of direct and indirect cash flow statements, including how cash flows can be computed using income statement and balance sheet data
CFA® 2025 Level I Curriculum, Volume 2, Module 4.