Calculate the amount of cash from sale of machinery from the following items :
A machine costing ₹20,000 having book value of ₹15,000 is sold for ₹12,000 and depreciation charged during the year was ₹8,000. The opening and closing balance in machinery account was ₹1,80,000 and ₹1,72,000 respectively.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → ₹12,000
The cash inflow from the sale of a fixed asset is the amount actually received for it, shown under investing activities. The cost, book value and depreciation are needed only to find the loss on sale and the purchases of the year.
Cash received on sale of the machine = ₹12,000
Loss on sale (book value ₹15,000 − ₹12,000) = ₹3,000, added back in operating activities
₹20,000 is the original cost of the machine, not cash received.
NCERT (2026-27 edition):
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