W Ltd has given you the following information:
Machinery (Opening Balance) ₹50,000
Machinery (closing Balance) ₹60,000
Accumulated Depreciation (opening balance) ₹25,000
Accumulated Depreciation (closing balance) ₹15,000
During the year, a machine costing ₹25,000 with accumulated depreciation of ₹15,000 was sold for ₹13,000. Calculate Cash Flow from Investing Activity.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (₹22,000)
Purchases of machinery are found from the Machinery Account at cost: opening balance, less the cost of the machine sold, plus purchases, gives the closing balance.
Purchase of machinery:
= Closing balance − (Opening balance − Cost of machine sold)
= ₹60,000 − (₹50,000 − ₹25,000)
= ₹35,000
Cash flow from investing activities:
Sale of machinery = ₹13,000
Purchase of machinery = (₹35,000)
Net cash used = (₹22,000)
The figures are the same as in the NCERT illustration below.
NCERT (2026-27 edition):
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