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

question 28

Essay

While preparing a statement of cash flows, you encountered the following transaction:
February 1, 2017: 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:

Percentage Change

A mathematical calculation that shows how much a quantity has increased or decreased as a percentage of its previous value.

Net Operating Income

The profit generated from normal business operations, excluding expenses from interest and taxes.

Contribution Margin Ratio

The proportion of sales revenue that exceeds variable costs, indicating how much contributes to covering fixed costs and generating profit.

Target Profit

The amount of net income a company aims to achieve for a specific period as part of its financial and operational planning.