W Ltd. has given you the following information:
Machinery as on April 1, 2020- ₹50,000
Machinery as on March 31, 2021 - ₹60,000
Accumulated Depreciation on April 01, 2020 - ₹25,000
Accumulated Depreciation on March 31, 2021- ₹15,000
During the year, a machine, costing ₹25,000 with accumulated depreciation of ₹15,000 was sold for ₹13,000.
Cash flow from Investing Activities will be:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (₹22,000)
Find the machinery purchased from the gross Machinery Account, then net it with the sale proceeds.
Opening machinery = Rs. 50,000
Less: cost of machine sold = Rs. 25,000
Balance = Rs. 25,000
Closing machinery = Rs. 60,000, so purchase = 60,000 − 25,000 = Rs. 35,000 (outflow)
Sale of machine = Rs. 13,000 (inflow)
Net cash used in investing activities = 13,000 − 35,000 = (Rs. 22,000)
Accumulated depreciation does not affect cash; it only shows the profit of Rs. 3,000 on sale (13,000 − book value 10,000), which belongs in operating activities.
NCERT (2026-27 edition):
NCERT (2026-27 edition):
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