While Preparing a Statement of Cash Flows, You Encountered the Following

question 23

Essay

While preparing a statement of cash flows, you encountered the following transaction:
February 1, 2015: Battles Corporation acquired a small office building in exchange for 50,000 shares of its own common stock; par value $10 per share; market value $15 per share.
Required:
Should this transaction be shown on the statement of cash flows? Why or why not?

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Definitions:

Accounting Profit

The difference between total revenue and total expenses when both are measured in accordance with generally accepted accounting principles.

Savings Account

A deposit account held at a financial institution that provides principal security and a modest interest rate.

Annual Interest

The amount of interest due over the course of a year on a loan, deposit, or investment, typically expressed as a percentage of the principal.

Economic Cost

The total cost of choosing one action over another, including both the explicit financial cost and the opportunity cost.