LK Ltd acquired shares in Informa Tech. and paid Rs. 2,50,000 as purchase consideration and received a dividend of Rs. 50,000 after the acquisition. Calculate the resulting cash flow of LK Ltd.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Rs. 2,00,000 investing activity outflow
Buying shares of another company and receiving dividend on them are both investing activities for a company that is not a financial enterprise, so the two are netted.
Paid to acquire shares = Rs. 2,50,000, an investing outflow
Dividend received on those shares = Rs. 50,000, an investing inflow
Net = Rs. 2,50,000 − Rs. 50,000 = Rs. 2,00,000 investing outflow
Dividend received is investing; dividend paid is financing. Nothing here raises or repays the company’s own capital or loans, so the financing options do not fit.
Note: This question is from NCERT (2026-27). NTA sets numerical questions from NCERT too, so do not ignore NCERT while practising numericals.
NCERT (2026-27 edition):
|
