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Chapter 23: Q4IFRS (page 1399)

Stan Conner and Mark Stein were discussing the statement of cash flows of Bombeck Co. In the notes to the statement of cash flows was a schedule entitled 鈥淣on-cash investing and financing activities.鈥� Give three examples of significant non-cash transactions that would be reported in this schedule.

Short Answer

Expert verified

Examples of Non-cash transactions are as follows:

  1. Issuing shares in exchange for non-cash assets;
  2. Issuing shares to pay off debt;
  3. Issuing bonds or notes in exchange for non-cash assets.

Step by step solution

01

Meaning of Financing activities

A trade鈥檚 net financing over a particular period is considered financing activities. The issuing and reimbursement of values, the payment of profits, the issuance and reimbursement of obligations, and capital rent obligations are all examples of financial activity.

02

Explanation on non-cash investing and financing activities

Non-cash investing and financing transactions are the transactions are the transactions that are engaged in financing and investing activities, without any change in the cash flows. It is reported separately under the schedule of 鈥淣on-cash investing and financing activities鈥�.

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Most popular questions from this chapter

In 2017, Elbert Corporation had net cash provided by operating activities of \(531,000, net cash used by investing activities of \)963,000, and net cash provided by financing activities of \(585,000. At January 1, 2017, the cash balance was \)333,000. Compute December 31, 2017, cash

What are the major sources of cash (inflows) in a statement of cash flows? What are the major uses (outflows) of cash?

(Computation of Operating Activities鈥擠irect Method) Presented below are two independent situations.

Situation A: Annie Lennox Co. reports revenues of \(200,000 and operating expenses of \)110,000 in its first year of operations, 2017. Accounts receivable and accounts payable at year-end were \(71,000 and \)29,000, respectively. Assume that the accounts payable related to operating expenses. (Ignore income taxes.)

Instructions

Using the direct method, compute net cash provided by operating activities.

Situation B: The income statement for Blues Traveler Company shows cost of goods sold \(310,000 and operating expenses (exclusive of depreciation) \)230,000. The comparative balance sheet for the year shows that inventory increased \(26,000, prepaid expenses decreased \)8,000, accounts payable (related to merchandise) decreased \(17,000, and accrued expenses payable increased \)11,000.

Instructions

Compute (a) cash payments to suppliers and (b) cash payments for operating expenses.

Springsteen Co. had the following activity in its most recent year of operations.

  1. Pension expense exceeds amount funded.
  2. Redemption of bonds payable
  3. Sale of the building at book value
  4. Depreciation
  5. Exchange of equipment for furniture
  6. Issuance of ordinary shares
  7. Amortization of intangible assets
  8. Purchase of treasury shares
  9. Issuance of bonds for land.
  10. Payment of dividends
  11. Increase in interest receivable on notes receivable
  12. Purchase of equipment.

Instructions Classify the items as (1) operating鈥攁dd to net income, (2) operating鈥攄educt from net income, (3) investing, (4) financing, or (5) significant non-cash investing and financing activities. Use the indirect method.

Question: Stan Conner and Mark Stein were discussing the presentation format of the statement of cash flows of Bombeck Co. At the bottom of Bombeck鈥檚 statement of cash flows was a separate section entitled 鈥淣oncash investing and financing activities.鈥� Give three examples of significant noncash transactions that would be reported in this section.
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