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
The whole sale price is a cash inflow from investing activities. The gain is already in the net profit but is not an operating cash flow, so it is deducted in working out cash from operating activities.
Book value = ₹1,50,000
Gain on sale = ₹10,000
Sale price (investing inflow) = ₹1,50,000 + ₹10,000 = ₹1,60,000
Operating activities: less gain on sale = ₹10,000
₹2,10,000 adds the gain to the cost of ₹2,00,000 instead of the book value; the gain is deducted, not added, in operating activities.
NCERT (2026-27 edition): |