Calculate Cash Flow from Investing Activities from the following information:

Particular

31^st March,
2019

(₹)

31^st March,
2018
(₹)

Investment in Land
3,00,000
3,00,000

Shares in Damodar Ltd. 1,50,000 1,50,000

12% Long-term Investments 80,000 50,000

Plant and Machinery 7,50,000 6,00,000

Patents 70,000 1,00,000

Goodwill
1,50,000
1,00,000

Additional Information:
1. A piece of land was purchased as an investment out of surplus. It was let out for commercial purpose and the rent received was ₹ 20,000.
2. Dividend received from Damodar Ltd. @ 12%.
3. Patents written off to the extent of ₹ 20,000. Some patents were sold at a profit of ₹ 10,000.
4. A machine costing ₹ 80,000 (depreciation provided thereon ₹ 30,000) was sold for ₹ 35,000. Depreciation charged during the year was ₹ 70,000.
5. During the year 12% investments were purchased for ₹ 1,00,000 and some investments were sold at a profit of ₹ 10,000. Interest on investments for the year was duly received.

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Solution

Cash Flow from Investing Activities

Particulars

Amount

(₹)

Amount

(₹)

Purchase of Plant and Machinery

(2,70,000)

Purchase of Investment

(1,00,000)

Purchase of Goodwill

(50,000)

Rent Received

20,000

Dividend Received (1,50,000 × 12%)

18,000

Sale of Plant and Machinery

35,000

Sale of Investment

80,000

Interest on Investments

6,000

Sale of Patents

20,000

Net Cash Used in Investing Activities

(2,41,000)

Working Notes:

WN1 Computation of Interest on Investments

Interest on 12% Long-term Investments =

WN2

Patents Account

Dr.

Cr.

Particulars

Amount

(₹)

Particulars

Amount

(₹)

Balance b/d

1,00,000

Profit and Loss A/c (Written-off)

20,000

Profit and Loss A/c (Profit on Sale)

10,000

Bank A/c (Sale- Bal. Fig.)

20,000

Balance c/d

70,000

1,10,000

1,10,000

WN3

12% Long-Term Investments Account

Dr.

Cr.

Particulars

Amount

(₹)

Particulars

Amount

(₹)

Balance b/d

50,000

Bank A/c (Sale- Bal. Fig.)

80,000

Bank A/c (Purchase)

1,00,000

Balance c/d

80,000

Profit and Loss A/c (Profit on Sale)

10,000

1,60,000

1,60,000

WN3

Plant and Machinery Account

Dr.

Cr.

Particulars

Amount

(₹)

Particulars

Amount

(₹)

Balance b/d

6,00,000

Depreciation A/c

70,000

Bank A/c (Purchase- Bal. Fig.)

2,70,000

Bank A/c (Sale)

35,000

Profit and Loss A/c (Loss on Sale)

15,000

Balance c/d

7,50,000

8,70,000

8,70,000

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Similar questions

From the following particulars of Bharat Gas Limited, calculate cash flows from investing activities. Also show the workings clearly preparing the ledger accounts.
$\begin{matrix} Assets & 31 - 03 - 2015 & 31 - 03 - 2016 Goodwill & 1, 00, 000 & 3, 00, 000 Patents & 2, 80, 000 & 1, 60, 000 Machinery & 10, 20, 000 & 12, 40, 000 10 % Long term Investment & 60, 000 & 1, 60, 000 Investment in Land & 1, 00, 000 & 1, 00, 000 Shares of Amartax Ltd. & 1, 00, 000 & 1, 00, 000 \end{matrix}$
Additional Information:
1. Patents were written off to the extent of Rs. 40,000 and some patents were sold at a profit of Rs. 20,000.
2. A Machine Cosing Rs. 1,40,000 (Depreciation provided thereon Rs. 60,000) was sold for Rs. 50,000. Depreciation charged during the year was Rs. 1,40,000.
3. On March 31, 2016, 10% Investments were purchased for Rs. 1,80,000 and some investments were sold at a profit of Rs. 20,000. Interest on Invsetment was received on March 31, 2016.
4. Amartax Ltd. Paid Dividend @ 10% on its shares.
5. A plot of land was purchased out of surplus fund for investment purposes and let out for commercial use and rent received Rs. 30,000.

Q. From the following particulars Bharat Gas Limited, calculate cash flows from investing activities. Also show the workings clearly preparing the ledger accounts.

Balance Sheet of Bharat Gas Limited.
as on…………….

\begin{matrix} Capital and Liabilities & 2010 (Rs.) & 2011 (Rs.) & Assets & 2010 (Rs.) & 2011 (Rs.) Goodwill & 1, 00, 000 & 3, 00, 000 Patents & 2, 80, 000 & 1, 60, 000 Machinery & 10, 20, 000 & 12, 40, 000 10 % Long Term Investment & 60, 000 & 1, 60, 000 Investment in Land & 1, 00, 000 & 1, 00, 000 Shares of Amartax Ltd. & 1, 00, 000 & 1, 00, 000 \end{matrix}

Additional Information:
(a) Patents were written-off to the extent of Rs. 40,000 and some patents were sold at a profit of Rs. 20,000.
(b) A machine costing Rs. 1,40,000 (depreciation provided thereon Rs. 60,000) was sold for Rs. 50,000. Depreciations charged during the year was Rs 1,40,000.
(c) On March 31, 2007,

10 %

investments were purchased for Rs. 1,80,000 and some investments were sold at a profit of Rs. 20,000. Interest on investment was received on March 31, 2011.
(d) Amartax Ltd paid dividend @

10 %

on its shares.
(e) A plot of land had been purchased for investment purposes and let out for commercial use and rent received Rs. 30,000.

Q. From the following particulars, calculate Cash Flow from Investing Activities


Particulars	Purchased (₹)	Sold (₹)
Machinery	6,20,000	2,00,000
Investments	2,40,000	80,000
Goodwill	1,00,000	...
Patents	...	1,50,000

Additional Information:

1. Interest received on debentures held as investment ₹ 8,000.

2. Interest paid on debentures issued ₹ 20,000.

3. Dividend received on shares held as investment ₹ 20,000.

4. Dividend paid on Equity Share Capital ₹ 30,000.

5. A plot of land was purchased out of the surplus funds for investment purposes and was let out for commercial use. Rent received ₹ 50,000 during the year.

Q. From the following information, calculate Cash Flow from Investing Activities:

	₹		₹
Purchase of Machine	2,50,000	Purchase of Investments	1,60,000
Purchase of Goodwill	1,00,000	Sale of Patents	40,000
Sale of Machine	35,000	Interest and Dividend Received	10,000
Sale of Investment	50,000

A building was purchased as investment out of surplus which was let out for commercial purposes.
Rent Received ₹20,000.

From the following information, calculate Cash Flow from Investing Activities

Particular	31^st March, 2019 (₹)	31^st March, 2018 (₹)
Plant and Machinery	10,00,000	8,50,000
Investment (Long-term)	1,00,000	40,000
Land (At Cost)	1,00,000	2,00,000

Additional Information:
1. Depreciation charged on Plant and Machinery ₹ 50,000.
2. Plant and Machinery with a Book Value of ₹ 60,000 was sold for ₹ 40,000.
3. Land was sold at a profit of ₹ 60,000.
4. No investment was sold during the year.

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Cash Flow from Investing Activities
	Particulars	Amount (₹)	Amount (₹)
	Purchase of Plant and Machinery	(2,70,000)
	Purchase of Investment	(1,00,000)
	Purchase of Goodwill	(50,000)
	Rent Received	20,000
	Dividend Received (1,50,000 × 12%)	18,000
	Sale of Plant and Machinery	35,000
	Sale of Investment	80,000
	Interest on Investments	6,000
	Sale of Patents	20,000
	Net Cash Used in Investing Activities		(2,41,000)

Patents Account
Dr.		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Balance b/d	1,00,000	Profit and Loss A/c (Written-off)	20,000
Profit and Loss A/c (Profit on Sale)	10,000	Bank A/c (Sale- Bal. Fig.)	20,000
		Balance c/d	70,000
	1,10,000		1,10,000

12% Long-Term Investments Account
Dr.		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Balance b/d	50,000	Bank A/c (Sale- Bal. Fig.)	80,000
Bank A/c (Purchase)	1,00,000	Balance c/d	80,000
Profit and Loss A/c (Profit on Sale)	10,000
	1,60,000		1,60,000

Plant and Machinery Account
Dr.		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Balance b/d	6,00,000	Depreciation A/c	70,000
Bank A/c (Purchase- Bal. Fig.)	2,70,000	Bank A/c (Sale)	35,000
		Profit and Loss A/c (Loss on Sale)	15,000
		Balance c/d	7,50,000
	8,70,000		8,70,000