The following is an extract of a Balance Sheet :
| Particulars |
31 March |
31 March 2022 (₹) |
| Goodwill | 6,00,000 | 4,00,000 |
| Land and building | 15,00,000 | 10,00,000 |
Additional Information: Goodwill amortised during the year ₹1,50,000.
Determine the outflow of Cash from Investing Activities.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → ₹8,50,000
Goodwill purchased = closing ₹6,00,000 + amortised ₹1,50,000 − opening ₹4,00,000 = ₹3,50,000
Land and building purchased = ₹15,00,000 − ₹10,00,000 = ₹5,00,000 (no sale or depreciation given)
Cash outflow from investing activities = ₹3,50,000 + ₹5,00,000 = ₹8,50,000
The ₹1,50,000 amortised is a non-cash charge; it is added back in operating activities and only explains part of the goodwill movement.