Question

Calculate ‘Cash Flows from Investing Activities’ from the following information: \[ \begin{array}{|l|c|c|} \hline \text{Particulars} & \text{31.3.2023 (₹)} & \text{31.3.2022 (₹)} \\ \hline \text{Plant and Machinery} & 4,10,000 & 3,00,000 \\ \text{Goodwill} & 1,80,000 & 80,000 \\ \hline \end{array} \] Additional Information:
- A machine costing ₹ 85,000 (depreciation provided thereon ₹ 15,000) was sold for ₹ 62,000.
- Depreciation charged during the year amounted to ₹ 48,000.

Hint:

While calculating cash flows from investing activities, include proceeds from the sale of fixed assets and investments but deduct purchases of new assets or investments.

Answer 1

1. Proceeds from Sale of Machinery: \[ \text{Proceeds from Sale} = ₹ 62,000 \] 2. Purchase of New Machinery: \[ \text{Increase in Plant and Machinery} = ₹ 4,10,000 - ₹ 3,00,000 = ₹ 1,10,000 \] 3. Investment in Goodwill: \[ \text{Increase in Goodwill} = ₹ 1,80,000 - ₹ 80,000 = ₹ 1,00,000 \] 4. Net Cash Flows from Investing Activities: \[ \text{Cash Flows from Investing Activities} = \text{Proceeds from Sale of Machinery} - \text{Purchase of Machinery} - \text{Investment in Goodwill} \] \[ = ₹ 62,000 - ₹ 1,10,000 - ₹ 1,00,000 = -₹ 1,48,000 \] Final Answer: Net Cash Flows from Investing Activities = \(-₹ 1,48,000\).