# ASC 230-970: Statement of Cash Flows — Real Estate—General

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/230/970/)

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## ASC 230-970: Statement of Cash Flows — Real Estate—General

### Machine-generated study aids

```json
{
  "summary": "This Subtopic addresses how a real estate entity classifies cash payments to purchase real estate in the statement of cash flows. Real estate is generally a productive asset, so its purchase is an investing cash outflow; but if a developer acquires real estate specifically for resale (to be subdivided, improved, and sold in lots), the payment is an operating cash flow because the property is akin to inventory.",
  "key_points": [
    "This Subtopic provides cash flow classification guidance regarding cash payments to purchase real estate (230-970-05-1).",
    "The Topic 230 definitions of operating and investing activities are flexible enough to accommodate assets that are generally productive assets but in certain cases are inventory (230-970-45-1).",
    "A cash payment to purchase real estate is generally an investing cash outflow because real estate is generally a productive asset (230-970-45-1).",
    "If a real estate developer acquires real estate to be subdivided, improved, and sold in individual lots, the purchase payment is classified as an operating cash flow because the real estate is acquired specifically for resale and is similar to inventory (230-970-45-1).",
    "The scope of this Subtopic follows the Overall Real Estate Subtopic scope in Section 970-10-15 (230-970-15-1)."
  ],
  "categories": [
    "Cash flows",
    "Presentation",
    "Inventory and PP&E",
    "Industry-specific"
  ],
  "audience_level": "intermediate",
  "student_note": "Classic exam trap: students reflexively call every real estate purchase an investing outflow, but intent governs — a developer buying lots for resale reports operating outflows, which materially changes reported operating cash flow.",
  "related_topics": [
    "230-10",
    "970-10",
    "970-360",
    "330-10"
  ],
  "key_concepts": [
    "operating activities",
    "investing activities",
    "productive asset",
    "real estate held for resale",
    "inventory classification",
    "cash flow classification",
    "real estate developer"
  ]
}
```

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## ASC 230-970-05: 05 Overview and Background

[Read section](https://asc.understandingaccounting.org/asc/230/970/#05-overview-and-background)

SEC content: no

##### [230-970-05-1](https://asc.understandingaccounting.org/asc/230/970/#230-970-05-1)

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This Subtopic provides cash flow classification guidance regarding cash payments to purchase real estate.

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## ASC 230-970-15: 15 Scope and Scope Exceptions

[Read section](https://asc.understandingaccounting.org/asc/230/970/#15-scope-and-scope-exceptions)

SEC content: no

#### Overall Guidance

##### [230-970-15-1](https://asc.understandingaccounting.org/asc/230/970/#230-970-15-1)

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This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 970-10-15.

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## ASC 230-970-45: 45 Other Presentation Matters

[Read section](https://asc.understandingaccounting.org/asc/230/970/#45-other-presentation-matters)

SEC content: no

##### [230-970-45-1](https://asc.understandingaccounting.org/asc/230/970/#230-970-45-1)

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The definitions of operating and investing activities in Topic 230 provide flexibility for the appropriate classification of cash receipts and payments for assets that generally are productive assets but in certain cases may be inventory. For example, real estate generally is considered a productive asset, and a cash payment to purchase real estate generally is an investing cash outflow. However, if real estate is acquired by a real estate developer to be subdivided, improved, and sold in individual lots, then the cash payment to purchase that real estate would be classified as an operating cash flow because the real estate is acquired specifically for resale and is similar to inventory in other businesses.