Calculate the Cash Flow from investing activities from the following particulars :

During this year machine costing 2,00,000 were sold at a profit of ₹1,50,000 and depreciation charged ₹2,50,000.

₹3,50,000 outflow

The correct answer is Option 1 - ₹ 3,50,000 Outflow.

Machinery purchased = 6,00,000 (Outflow of cash)
Machinery sold = 2,50,000 (inflow of cash)

Net cash flow = 6,00,000 - 2,50,000
                    = 3,50,000(outflow)

Machinery Account

Machinery cost which is sold = 2,00,000
Less: Accumulate depreciation on this = 1,00,000
Book value = (200000 -100000)
                 = ₹1,00,000
Profit at which it is sold = 1,50,000
Sale value = 1,00,000 +1,50,000
                = ₹2,50,000

Accumulated Depreciation Account