Question

The appropriate section in the statement of cash flows for reporting the purchase of land in exchange for common stock is: Multiple Choice Operating activities. Financing activities. Investing activities. In a note to the statement or in a separate schedule. Reconciliation of cash balance.

Answer 1

The purchase of land in exchange for common stock should be adequately reported in cash flows statement through the Schedule of Non-cash investing or financing activity.

Basically, the non-cash investing and financing activities entails use of some financial tools (not cash) to make an investment or purchase.

• The examples of transaction reported as non-cash investing and financing activities is  taking out of loan or signing a note payable.

In conclusion, the purchase of land in exchange for common stock should be reported in the schedule of Non-cash investing or financing activity.

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