Goodwill was of ₹80,000 on March 31st 2023 and was of ₹60,000 on March 31st 2022. How will you treat the above, while preparing cash flow statement for the year ended March 31, 2023?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) - Outflow of ₹20,000 Cash from Investing Activities.
Goodwill is increased by ₹20,000 (80,000-60,000).
Goodwill is an intangible asset which is included in investing activity of cash flow statement.
As goodwill is increased means it is purchased by the company so it is a cash outflow of ₹20,000.