A noncash investing and financing activity is defined as a financing or investing activity that will not result in a cash inflow or cash outflow.
The Kaplan/Schweser book gives an example of a noncash financing/investing activity; “… if a firm acquires real estate with financing provided by the seller, the firm has made an investing and financing decision. This transaction is the equivalent of borrowing the purchase price. However, since no cash is involved with the transaction, it is not reported as an investing and financing activity in the cash flow statement.”
Can someone please explain how this would not be reported on the cash flow statement? From what i’m understanding here, is that the seller financing the real estate would mean that eventually the buyer will have to pay principal and interest in the future. Am I missing something here very obvious?
Thanks in advance
Edit: I found this post from last year but would appreciate if someone could also explain the reasoning behind this. Here is the post from last year.