CFA Practice Question

There are 534 practice questions for this study session.

CFA Practice Question

A company issued shares to acquire a large tract of undeveloped land for future development. The most likely recording of this transaction in the cash flow statement is as a(n) ______.
A. disclosure in a note or supplementary schedule
B. outflow from investing activities and an inflow from financing activities
C. outflow from operating activities and an inflow from financing activities
Explanation: Non-cash transactions are not reported in the cash flow statement, but if they are significant, they are reported in a note or supplementary schedule.

User Contributed Comments 5

User Comment
farhan92 interesting..i thought it was an inflow from financing (the cash they get for selling shares) and this cash is then used to buy the land
wilsonesou i also thing that in this case there are 2 operations. issuance of capital and using that Money to buy land.
dada It issued shares to buy land directly, so there is no cash changed hands.
houstcarr should say that it issued shares and exchanged them for land if they want to imply that it is a not cash transaction. otherwise this sounds like a 'use of proceeds' sentence taken from a prospectus of a cash for shares offer
zhefuli So they are giving shares directly to the previous owner of the land I guess.
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