Report noncash investing and financing activities

Information for the preparation of the statement of cash flows is derived from three sources:
· Comparative balance sheets
· Current income statements
· Selected transaction data (footnotes)

Some investing and financing activities do not flow through the statement of cash flow because they do not require the use of cash. Those activities must be disclosed in either a footnote or a supplemental schedule to the cash flow statements.

Examples Include:

· Conversion of debt to equity
· Conversion of preferred equity to common equity
· Acquisition of assets through capital leases
· Acquisition of long-term assets by issuing notes payable
· Acquisition of non-cash assets (patents, licenses) in exchange for shares or debt securities