Question

If common stock was issued to acquire an $8,000 machine, how would the transaction appear on...

If common stock was issued to acquire an $8,000 machine, how would the transaction appear on the statement of cash flows?

It would not appear on the statement of cash flows but rather on a schedule of noncash investing and financing activities.

It would be a positive $8,000 in the financing section and a negative $8,000 in the investing section.

It would depend on whether you are using the direct or the indirect method.

It would be a negative $8,000 in the financing section and a positive $8,000 in the investing section.

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Answer #1

Answer: It would not appear on the statement of cash flows but rather on a schedule of noncash investing and financing activities

Explanation:

The transaction given in the question would not appear in cash flow statement because there is no cash flow involved.

That is, no cash outflow was involved at the time of acquiring machine and no cash inflow was involved at the time of issuing stock. Instead, acquisition of machine was met by issuing common stock which results in no impact on cash flow of the company. since there is no impact on cash flow of company, cash flow satement will remain unaffected.

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