Which transaction among the following is NOT disclosed in the cash flow statement due to the non-cash nature of the transaction.

A cash flow statement records only those transactions that involve actual movement of cash or cash equivalents. Transactions that don't involve cash inflows or outflows are excluded from the statement.

Option 1: Disposal of Equipment and non-current investments

This involves sale of assets which generates cash inflow. It appears in the cash flow statement under investing activities.

Option 2: Assets acquired by issue of shares

When a company acquires assets by issuing shares to the seller, there is no cash transaction. The company directly exchanges shares for assets. Since no cash changes hands, this transaction is not shown in the cash flow statement. Such non-cash transactions are disclosed separately in the notes to accounts.

Option 3: Redemption of preference shares

Redemption requires the company to pay cash to preference shareholders. This cash outflow is recorded in the cash flow statement under financing activities.

Option 4: Sale of property

Sale of property results in cash receipt, which is shown in the cash flow statement under investing activities.

As per AS-3 (Cash Flow Statement), non-cash transactions such as:

• Acquisition of assets by issuing shares or debentures
• Conversion of debentures into equity shares
• Acquisition of assets under finance lease

are excluded from the cash flow statement as they don't involve actual cash flows, though they represent significant investing and financing activities.

The correct answer is Option 2.