Question：Waterloo Co acquired a freehold building for cash, financed in full by issuing for cash 202,000 $1 ordinary shares at a premium of $2 per share.
In its statement of cash flows this transaction should be stated as:
A. Inflow: nil, Outflow: $606,000.
B. Inflow: $606,000, Outflow: $606,000.
C. Inflow: nil, Outflow: nil.
D. Inflow: $606,000, Outflow: nil.
The answer isinflow $606,000, outflow $606,000.
The outflow is classified under ‘Purchase of property, plant and equipment’.
The inflow is classified under ‘Proceeds from issuance of share capital’.