ABC Ltd. has given you the following information:
|
|
Rs. |
|
Machinery as on April 01, 2024 |
50,000 |
|
Machinery as on March 31, 2025 |
60,000 |
|
Accumulated Depreciation on April 01, 2024 |
25,000 |
|
Accumulated Depreciation on March 31, 2025 |
15,000 |
During the year, a Machine costing Rs. 25,000 with Accumulated Depreciation of Rs. 15,000 was sold for Rs. 13,000. Calculate cash flow from Investing Activities on the basis of the above information.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Rs. 22,000 Outflow
Book Value=Cost−Accumulated Depreciation=25,000 − 15,000 = 10,000
Profit on Sale = 13,000 - 10,000 = Rs. 3,000
Find Purchase of Machinery during the Year:
Opening Balance+Purchases−Cost of Machinery Sold = Closing Balance
50,000 + Purchases − 25,000 = 60,000
Purchases=60,000−25,000+25,000 = 35,000
Cash Flow from Investing Activities=Sale Proceeds − Purchase of Machinery
=13,000−35,000
=−22,000
Since the result is negative (a net payment was made), it represents a Cash Outflow.