A part of fixed Assets costing ₹2,00,000 (Book value 1,50,000) was sold at a gain of ₹10,000.
How it will affect the cash flow statement?
Answer & explanation
Correct answer: option 2
The correct answer is option 2- Inflow ₹1,60,000 in Investing Activities and less ₹10,000 in Operating Activities.
Book value = 1,50,000
Gain = 10,000
Total sale value = 1,50,000 + 10,000
= 1,60,000
Inflow ₹1,60,000 in Investing Activities as this is the sale value.
₹10,000 in Operating Activities is deducted as it is not operating activity. This is non recurring in nature so gain on sale is deducted.