Question

Calculate 'Cash Flows from Investing Activities' from the given information:

Comparative Statement of Assets

Particulars	31.03.2024 (₹)	31.03.2023 (₹)
10% Long Term Investments	2,50,000	4,50,000
Plant and Machinery	8,00,000	6,00,000
Goodwill	1,40,000	1,00,000
Investment in shares of Pinnacle Ltd.	14,00,000	5,00,000
Patents	-	1,50,000

Hint:

Account for depreciation and book value adjustments to correctly identify investing cash flows.

Answer 1

Sale of Patents: ₹ 1,50,000
Sale of Machine: ₹ 48,000
Purchase of Plant: ₹ 2,12,000 (calculated as 8,00,000 - 6,00,000 + 60,000 - 48,000)
Purchase of Pinnacle Shares: ₹ 9,00,000
Purchase of Goodwill: ₹ 40,000
Decrease in 10% LTI: +₹ 2,00,000 (calculated as −\(4,50,000 - 2,50,000\)) Cash Flow from Investing Activities:
Inflows: ₹ 3,98,000 (Sale of patents ₹ 1,50,000 + machine ₹ 48,000 + decrease in LTI ₹ 2,00,000)
Outflows: ₹ 2,12,000 (Purchase of Plant) + ₹ 9,00,000 (Pinnacle Shares) + ₹ 40,000 (Goodwill)
Net: −₹ 7,54,000 (calculated as 3,98,000 - (2,12,000 + 9,00,000 + 40,000))