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
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 |
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Account for depreciation and book value adjustments to correctly identify investing cash flows.
Updated On: Jul 7, 2025
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Solution and Explanation
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
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