KRISHNA Ltd. has given you the following information:
| Particulars | Rs. |
| Machinery as on April 01, 2024 | 1,50,000 |
| Machinery as on March 31, 2025 | 1,60,000 |
| Accumulated Depreciation on April 01, 2024 | 1,25,000 |
| Accumulated Depreciation on March 31, 2025 | 1,15,000 |
During the year, a machine costing Rs. 75,000 with Accumulated Depreciation of Rs. 15,000 was sold for Rs. 50,000.
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) → Net cash used in Investing Activities Rs. 35,000
Investing activities cover the purchase and sale of fixed assets. The sale proceeds are given, but the purchase is not, so it is found from the Machinery Account at cost.
Purchase of machinery:
Opening Rs. 1,50,000 + Purchases − Cost of machine sold Rs. 75,000 = Closing Rs. 1,60,000
Purchases = Rs. 1,60,000 + Rs. 75,000 − Rs. 1,50,000 = Rs. 85,000 (outflow)
Net cash flow from investing activities:
Sale of machinery = Rs. 50,000 (inflow)
Purchase of machinery = Rs. 85,000 (outflow)
Net = Rs. 50,000 − Rs. 85,000 = Rs. 35,000 used
Accumulated depreciation and the loss on sale (book value Rs. 75,000 − Rs. 15,000 = Rs. 60,000, sold for Rs. 50,000) involve no cash, so they stay out of this figure; the loss is adjusted under operating activities.
Note: NTA picked this question from an NCERT (2026-27) illustration and changed the figures. Do not ignore NCERT while practising numericals.
NCERT (2026-27 edition):
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