Question

From the following information, calculate Cash Flows from Investing Activities :

Particulars	31-03-2024 (₹)	31-03-2023 (₹)
Machinery (at cost)	3,80,000	3,00,000
Accumulated Depreciation	62,000	45,000

Additional Information :
A machine costing ₹ 50,000 on which accumulated depreciation was ₹ 20,000 was sold at a profit of 10%.

Hint:

Always adjust asset purchases and sales under investing activities. Equity, debentures, and interest belong under financing activities.

Answer 1

Cost of machinery sold: ₹ 50,000
Less: Accumulated Depreciation ₹ 20,000
Book value = ₹ 30,000
Selling price = ₹ 30,000 + 10% of ₹ 30,000 = ₹ 33,000 Cash outflow for purchase of machinery: Opening machinery balance = ₹ 3,00,000
Add: Purchases – Sales + Closing = ₹ 3,80,000
Purchases = ₹ 3,80,000 – ₹ 3,00,000 + ₹ 50,000
Purchases = ₹ 1,30,000 Net cash flow from investing activities:
Sale proceeds of machinery = ₹ 33,000
Less: Purchase of machinery = ₹ 1,30,000
Net Outflow = ₹ 97,000