ABC Ltd. has given you the following information:
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|
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
Investing activities here are the sale of the old machine and the purchase of new machinery. The purchase is not given, so it is found from the Machinery Account (at cost).
Closing machinery = opening + purchases − cost of machine sold
60,000 = 50,000 + purchases − 25,000, so purchases = Rs. 35,000 (outflow)
Sale of machine = Rs. 13,000 (inflow; the sale proceeds, not the book value of 10,000)
Net cash from investing activities = 13,000 − 35,000 = Rs. 22,000 outflow
The accumulated depreciation figures only confirm the depreciation of the year (Rs. 5,000); depreciation is not a cash flow, so it does not enter the investing section.
NCERT (2026-27 edition):
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