What would be the impact of the Purchase of Land and Building for ₹10,00,000 and Consideration paid by the issue of Debentures on Cash Flow Statement?

No Flow

The correct answer is option 4- No Flow.

There will be no flow of cash if debentures are issued as purchase consideration for the purchase of land & building.

When a company purchases land and building for10,00,000 and pays for it by issuing debentures (which are debt instruments), there is no impact on the cash flow statement. Issuing debentures does not involve any cash inflow or outflow at the time of issuance. Debentures represent a form of borrowing where the company promises to repay the debtholders in the future, typically with interest. Since no cash is exchanged when debentures are issued, there is no immediate impact on the cash flow statement. While the company is indeed acquiring an asset (land and building) with a cost of Rs 10,00,000, and this transaction involves a cash outflow if paid in cash, the method of payment here is through issuing debentures. Since issuing debentures does not affect cash flow immediately, there is no cash outflow related to the purchase of the land and building in this case.