Ditka Motors purchases an automobile for its new car inventory from Generous Motors, which finances this transaction through its financial subsidiary, Generous Motors Credit Company (GMCC). Ditka pays no funds to Generous Motors or GMCC until it sells the automobile. Ditka must then repay the balance of the loan plus interest to GMCC. How should Ditka report the acquisition and repayment transactions in its Statement of Cash Flows?

Required:

a) Provide responses for each independent case on the appropriate accounting treatment.

b) Support your responses with code sections from the FASB Accounting Standards Codification (ASC)