Nitin Ltd. provides you the following information.
| Particulars | 1 April 2021 | 31 March 2022 |
|---|---|---|
| Machinery | 2,40,000 | 3,50,000 |
| Accumulated Depreciation | 50,000 | 45,000 |
During the year, a machine costing Rs. 90,000 with accumulated depreciation of Rs. 31,500 was sold for Rs. 52,000. Calculate Cash Flow from Investing Activities on the basis of the above information.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → 1,48,000
Investing activities record the cash spent on buying machinery and the cash received from selling it. The purchase is found from the machinery account at cost; accumulated depreciation does not affect cash.
Closing machinery = Rs. 3,50,000
Add: cost of machine sold = Rs. 90,000
Less: opening machinery = Rs. 2,40,000
Machinery purchased = Rs. 2,00,000
Cash flow from investing activities:
Sale of machine (inflow) = Rs. 52,000
Purchase of machinery (outflow) = (Rs. 2,00,000)
Net cash used in investing activities = Rs. 1,48,000 (outflow)
The loss on sale (book value Rs. 58,500 against Rs. 52,000 received) is a non-cash item adjusted under operating activities; only the Rs. 52,000 actually received is shown here.
NCERT (2026-27 edition):
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