ABC Ltd has provided the following information:
On April 1, 2018
Machinery ₹5,00,000
Accumulated Depreciation ₹2,50,000
On March 31, 2019
Machinery ₹6,00,000
Accumulated Depreciation ₹1,50,000
During the year machine costing ₹2,50,000 (depreciation charged ₹1,50,000) was sold for ₹1,30,000.
Calculate cash flow from investing activities on the basis of above information.
Answer & explanation
Correct answer: option 1
The correct answer is Option 1- Cash used ₹2,20,000
Sale of Machinery 1,30,000
Less: Purchase of Machinery (3,50,000)
Net cash used in Investing Activities = 3,50,000 -1,30,000
= 22,0000
As figure is outflow in accounting so correct ans will be cash used 2,20,000.
Machinery Account
|
Particulars |
J.F. |
Amount(₹) |
Particulars |
J.F. |
Amount(₹) |
|
Balance b/d |
|
5,00,000 |
Cash (proceeds from sale of machine) |
|
1,30,000 |
|
Statement of Profit and Loss |
30,000 |
Accumulated Depreciation |
1,50,000 |
||
|
Cash (balancing figure: |
3,50,000 |
Balance c/d |
6,00,000 |
||
|
|
8,80,000 |
|
8,80,000 |
Accumulated Depreciation Account
|
Particulars |
J.F. |
Amount (₹) |
Particulars |
J.F. |
Amount (₹) |
|
Machinery |
|
1,50,000 |
Balance b/d |
|
2,50,000 |
|
Balance c/d |
1,50,000 |
Statement of Profit and Loss |
50,000 |
||
|
|
3,00,000 |
|
3,00,000 |