Question

Which of the following is not an example of a significant noncash transaction? Conversion of bonds into common stock. Sale of plant assets. Issuance of common stock to purchase land. Issuance of debt to purchase equipment. All of the above are significant noncash transactions.

Answer 1

Answer:

Sale of plant assets.  If the company sales an equipment it will receive cash for it. We are not given with any information of this transaction not being in cash, so we should assume it was a sale in cash or cash equivalent.

Explanation:

Conversion of bonds into common stock. The bonds, which are outstanding and represent a promise to pay, are converted into common stock, this transaction doesn't involve cash.

Issuance of common stock to purchase land. The land is acquire in exchange of common stock, the company is not using cash. the owner of the land can later sold the stock to a third party but it won't affect the cash flow of the company.

Issuance of debt to purchase equipment Like singing a note to purchase a machine, no cash is involve.