[heyjustin]

A company acquired a building, paying a portion of the purchase price in cash and issuing a mortgage

note payable to the seller for the balance. In a statement of cash flows, what amount is included in financing activities for the transaction?

A. Cash payment

B. Acquisition price

C. Zero

D. Mortgage amount

My answer is D, but the correct answer is C, Could anyone tell me why C?

Issuing a mortgage is not a financing activity??

Thanks in advance!! 🙂

[Credit Revenue]

Issuing a mortgage has no cash impact.

A - 79 expires 4/30/16 need a pass on REG
B - 78
F - 80
R - 83!!! Can live again!

[heyjustin]

Thanks,Credit Revenue!! I got it.

[Credit Revenue]

YW

A - 79 expires 4/30/16 need a pass on REG
B - 78
F - 80
R - 83!!! Can live again!

[tuanxn]

Issuing a mortgage is a financing activity if you receive the cash. Since the company issued a mortgage in return for the building, no cash is exchanged for the mortgage, therefore there is no financing-related cash activity.

However, the transaction will be reported as a non-cash transaction.

[Author]

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