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 cash flow is from investing activity?
Answer & explanation
Correct answer: option 4
The correct answer is option 4- ₹40,000.
Sale of plant = 16,000 (inflow)
Purchase of plant = 66,000 (outflow)
Sale of patent = 1,10,000 (inflow)
Purchase of goodwill = 20,000 (outflow)
Net cash flow = Inflow - Outflow
= (16,000 + 1,10,000) - (66,000 + 20,000)
= 1,26,000 - 86,000
= 40,000
So, there is cash inflow of 40,000 from investing activity.