Situation
Kelly Company, a small corporation, is preparing its 2019 financial statements. At the end of 2019, the company purchased a building for $100,000, paid $20,000 as a down payment, and signed an $80,000 mortgage.
Kelly’s president is concerned about how to report this transaction on the company’s statement of cash flows and has asked you to “look into this issue for me.”
Directions
Research the related U.S. using the FASB’s Accounting Standards Codification and prepare a short memo to the president that summarizes how to report this transaction on the 2019 statement of cash flows. Cite your reference and applicable paragraph numbers.
