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 machine costing 2,00,000 were 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.
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
|
Particulars |
J.F. |
Amount(₹) |
Particulars |
J.F. |
Amount(₹) |
|
To Balance b/d |
|
5,00,000 |
By Cash |
|
2,50,000 |
| By Statement of Profit and Loss (profit on sale of machinery) |
1,50,000 |
By Accumulated Depreciation (dep on sold machinery) |
1,00,000 |
||
|
To Cash |
6,00,000 |
By Balance c/d |
9,00,000 |
||
|
|
12,50,000 |
|
12,50,000 |
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
|
Particulars |
J.F. |
Amount (₹) |
Particulars |
J.F. |
Amount (₹) |
|
To Machinery (bal. figure) |
|
1,00,000 |
By Balance b/d |
|
3,00,000 |
|
To Balance c/d |
4,50,000 |
By Statement of Profit and Loss |
2,50,000 |
||
|
|
5,50,000 |
|
5,50,000 |