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NEW QUESTION: 2
On 1 July 2012 Verity Ltd entered into a finance lease agreement. The terms of the agreement provided for annual payments of $5,000 on 1 July each year. The asset had a fair value at the inception of the lease of $25,000. $750 of interest in relation to this agreement was paid and charged to the income statement in the year ended 30 June 2013.
In addition to the above transaction, on 1 October 2012 Verity Ltd purchased a machine for cash of $6,500.
In accordance with IAS 7 Statement of Cash Flows, how should the above transactions be reflected in Verity Ltd's statement of cash flows for the year ended 30 June 2013?
A. $10,750 as investing outflows, $750 as an operating outflow
B. $31,500 as investing outflows
C. $6,500 as an investing outflow, $5,000 as a financing outflow
D. $6,500 as an investing outflow, $4,250 as a financing outflow, $750 as an operating outflow
Answer: D

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