Myers Real Estate Company Exchanged an Acre of Land in Exchange

question 30

Multiple Choice

Myers Real Estate Company exchanged an acre of land in exchange for five hundred shares of stock in the Midland Corporation.The land is worth $22,000 and the stock is worth $40 per share.How will this transaction be reported on the statement of cash flows?

• A)As a source of cash in the investing section, a use of cash in the financing section, and an adjustment to net income in the operating section for the loss
• B)As a source of cash in the investing section and a use of cash in the financing section
• C)As a non-cash investing and financing transaction
• D)As a use of cash in the investing section and a source of cash in the financing section

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Definitions:

Nonfinancial Performance Measure

A performance measure expressed in units rather than dollars.

Normal Standard

A benchmark or baseline condition expected to be present in a set of data, processes, or operations.

Direct Materials Price Variance

The difference between the actual cost of direct materials and the expected cost at standard prices.

Actual Price

The price at which goods or services are sold, reflecting current market conditions.