Researching GAAP
Response to the following problem:
Situation
The Kelly Company, a small corporation, is preparing its 2010 financial statements. At the end of 2010, the company purchased a building for $100,000, paying $20,000 as a down payment and signing an $80,000 mortgage. The president of Kelly 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 generally accepted accounting principles and prepare a short memo to the president that summarizes how to report this transaction on the 2010 statement of cash flows. Cite your reference and applicable paragraph numbers.