Calculate the Cash Flow from investing activities from the following particulars :
| PARTICULARS |
1.4.2016(₹) | 31.03.2017 |
| Machine at cost | 5,00,000 | 9,00,000 |
| Accumulated depreciation | 3,00,000 | 4,50,000 |
During this year machinery costing ₹2,00,000 was sold at a profit of ₹1,50,000 and depreciation charged ₹2,50,000.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → ₹3,50,000 outflow
Accumulated depreciation on the machine sold = ₹3,00,000 + ₹2,50,000 − ₹4,50,000 = ₹1,00,000
Book value of machine sold = ₹2,00,000 − ₹1,00,000 = ₹1,00,000
Sale proceeds = ₹1,00,000 + profit ₹1,50,000 = ₹2,50,000 (inflow)
Machine purchased = ₹9,00,000 + ₹2,00,000 − ₹5,00,000 = ₹6,00,000 (outflow)
Net cash used in investing activities = ₹6,00,000 − ₹2,50,000 = ₹3,50,000 outflow
Note: The book’s Do it Yourself item prints “during the year 2015”; it means the year 2017, in which the machine was sold.
NCERT (2026-27 edition):
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