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Question

Calculate Cash Flow from Investing Activities from the following information:
Particulars31st March,31st March,20152014Investment in shares of Miko. Ltd.18,00,0008,00,00012% Long Term Investments1,50,0005,00,000Plant and Machinery6,00,0004,00,000Goodwill1,20,00040,000
Additional Information:

(i) 9% dividend was received from Miko Ltd.
(ii) A machine costing Rs. 50,000 (depreciation provided thereon Rs. 15,000) was sold for Rs. 40,000. Depreciation charged during the year was Rs. 55,000.

 


Solution

                                        Cash Flow from Investing Activities
ParticularsAmount    Sale fo Plant and Machinery40,000Purchase of Plant and Machinery(2,90,000)Investment in Shares of Miko Ltd.(10,00,000)Dividend received from Miko Ltd. (Note 1)  (9% on Rs.8,00,000)72,000Sale of Long term Investment3,50,000Interest received on Investments (Note 1)  (12% on Rs.5,00,000)60,000Goodwill purchased(80,000)––––––––Net Cash used in Investing Activities(8,48,000)––––––––––

Note 1:
It is assumed that investment in shares of Miko Ltd. were made and long term invetment were sold on 31st March, 2015.
In case it is assumed that Investment in shares of Miko Ltd. were made and investments were sold on 1st April, 2014 dividend would be Rs. 1,62,000 and interest would be Rs. 18,000 and cash Flows from Investing Activities would be Rs. 8,00,000.

Dr.                                   Plant And Machinery A/c                      Cr.
ParticularsAmountParticularsAmountBalance b/d4,00,000Bank A/c40,000Profit and Loss A/c (Gain on  Sale)5,000Depreciation A/c55,000Bank A/c (Purchase of machinery)2,90,000––––––––Balance c/d6,00,000––––––––6,95,0006,95,000


Accountancy

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