Question

From the following information, calculate Cash Flows from Investing Activities :

Particulars	31-03-2024 (₹)	31-03-2023 (₹)
Machinery (at cost)	3,80,000	3,00,000
Accumulated Depreciation	62,000	45,000

Additional Information :
A machine costing ₹ 50,000 on which accumulated depreciation was ₹ 20,000 was sold at a profit of 10%.

Hint:

Always adjust asset purchases and sales under investing activities. Equity, debentures, and interest belong under financing activities.

Answer 1

Machinery Sold: Cost: ₹ 50,000
Less: Accumulated Depreciation: ₹ 20,000
Net Book Value: ₹ 30,000
Selling Price: ₹ 30,000 + (10% of ₹ 30,000) = ₹ 33,000
Cash Outflow for Machinery Purchase:Opening Machinery Balance: ₹ 3,00,000
Add: Purchases – Sales + Closing Balance = ₹ 3,80,000
Calculated Purchases: ₹ 3,80,000 – ₹ 3,00,000 + ₹ 50,000
Purchases: ₹ 1,30,000Net Cash Flow from Investing Activities:
Proceeds from Machinery Sale: ₹ 33,000
Less: Machinery Purchased: ₹ 1,30,000
Net Cash Outflow = ₹ 97,000