Question

Calculate 'Cash Flows from Investing Activities' from the given information:

Comparative Statement of Assets

Particulars	31.03.2024 (₹)	31.03.2023 (₹)
10% Long Term Investments	2,50,000	4,50,000
Plant and Machinery	8,00,000	6,00,000
Goodwill	1,40,000	1,00,000
Investment in shares of Pinnacle Ltd.	14,00,000	5,00,000
Patents	-	1,50,000

Hint:

Account for depreciation and book value adjustments to correctly identify investing cash flows.

Answer 1

Sale of Patents = \₹ 1,50,000
Sale of Machine = \₹ 48,000
Purchase of Plant = 8,00,000 - 6,00,000 + 60,000 - 48,000 = \₹ 2,12,000
Purchase of Pinnacle Shares = \₹ 9,00,000
Purchase of Goodwill = \₹ 40,000
Decrease in 10% LTI = −\(4,50,000 - 2,50,000\) = +\₹ 2,00,000 Cash Flow from Investing Activities:
Inflows: Sale of patents + machine + decrease in LTI = 1,50,000 + 48,000 + 2,00,000 = 3,98,000
Outflows: Purchase of Plant (2,12,000), Pinnacle Shares (9,00,000), Goodwill (40,000)
Net = 3,98,000 - (2,12,000 + 9,00,000 + 40,000) = −\₹ 7,54,000