Let's say that you purchase an asset partly with cash and partly with a bond issuance for it. The correct treatment wouldn't be to disclose the purchase of the fixed asset in the investing activities as an outflow and the proceeds from the bond issuance as a financing activity inflow? (at least that's how we do it in my clients).

In a Becker question however, where an asset is purchased with cash and a note payable, it recognizes as an investing outflow only the portion relating to cash and says that the note payable is a non cash! financing activity. How on earth is that possible? and how on earth are you going to reconcile the movement in the fixed assets when you create the cash flow schedule if you don't take into account the full purchase amount (because in your balance sheet the fixed asset would be recorded at purchase cost)...

Any help on this? It's so confusing. May be I m missing something.

DR Asset purchase cost

CR Cash paid

CR Note payable - non-cash

Per FAS 95, On the statement of cash flows, in "cash used in investing activities", you only disclose the "cash portion".

The non-cash portion is reported in Supplemental schedule of noncash investing and financing activities.

You are just issuing a note payable to purchase the asset. This is not related to proceeds from bond issuance.

Hope it helps!