Read the following information and answer the question.
| PARTICULARS | AMOUNT AT THE BEGINNING OF THE YEAR (₹) |
AMOUNT AT THE END OF THE YEAR (₹) |
| Plant (cost) | 3,00,000 | 3,20,000 |
| Accumulated depreciation | 90,000 | 1,00,000 |
| Patents | 2,60,000 | 1,40,000 |
| Goodwill | 80,000 | 1,00,000 |
ADDITIONAL INFORMATION:
- The depreciation charged during the year on the plant was ₹36,000.
- A plant having a book value of ₹20,000 was sold for ₹16,000 during the year.
- Patents having a book value of ₹80,000 were sold for ₹1,10,000 during the year.
How much amount of patents will be added/deducted to get cash flow from investing activities?
Answer & explanation
Correct answer: option 3
The correct answer is option 3- ₹1,10,000 added.
Opening balance = 2,60,000
Sales = 80,000
Closing balance = 1,40,000
Balancing figure (written off) = 2,60,000 - 80,000 - 1,40,000
= 40,000
As there is a sale of patent so that figure is used while calculating the investing activity. Sale of patent is 1,10,000 will make inflow of cash so it is added while calculating the cash flow from investing activity.