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Where does a company record the purchase of an available-for-sale security in the cash flow statement?

When a company purchases an available-for-sale security, the purchase cost represents a cash outflow and would be recorded in the investing section of the cash flow statement. This is captured in #3 in the visual below.

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  • What is reported in the investing section of the cash flow statement?

    The investing section includes purchase (capital expenditures) or sale of fixed assets. It would include loans made to other entities to collect interest income. Includes the purchase or sale of available-for-sale and held-to-maturity securities (excludes trading securities). Any acquisition or sale of a business unit would be included in the investing section.