Nice try! Retiring debt by issuing additional debt is correct, but there’s a better answer to this question.
According to GASB 9, paragraph 37, the following are examples of Noncash Investing, Capital, and Related Financing Activities:
- Acquiring property, plant or equipment by assuming directly related liabilities, such as a mortgage or loan
- The net unrealized increase or decrease in fair market value of investments
- Obtaining an asset by entering into a capital lease
- Acquiring property by exchanging another piece of property
- Retiring debt by issuing additional debt
- Retiring debt by giving noncash assets (for example, land) to a debtor
See Examples of Noncash Transactions for further review.
