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Question

From the following details. calculate Cash Flow from Investing Activities

Particulars

Closing (₹) Opening (₹)
Machinery (At Cost) 10,00,000 9,50,000
Accumulated Depreciation 1,50,000 1,10,000
Patents 2,00,000 3,00,000

Additional Information:

  1. During the year, machine costing ₹ 90,000 with accumulated depreciation of ₹ 60,000 was sold for ₹ 50,000.
  2. Patents written off were ₹ 50,000 while a part of patents were sold at a profit of ₹ 40,000.

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Solution

Cash Flow from Investing Activities

Particulars

Amount

(Rs)

Amount

(Rs)

Purchase of Machinery (WN1)

(1,40,000)

Sale of Machinery

50,000

Sale of Patents (WN3)

90,000

Nil

Net Cash Used in Investing Activities

Nil

Working Notes:

WN1:

Machinery Account

Dr.

Cr.

Particulars

Amount

(Rs)

Particulars

Amount

(Rs)

Balance b/d

9,50,000

Provision for Depreciation A/c

60,000

Profit and Loss A/c (Profit on Sale)

20,000

Bank A/c (Sale)

50,000

Bank A/c (Purchase)

1,40,000

Balance c/d

10,00,000

11,10,000

11,10,000

WN2:

Patents Account

Dr.

Cr.

Particulars

Amount

(Rs)

Particulars

Amount

(Rs)

Balance b/d

3,00,000

Patents Written off

50,000

Profit and Loss A/c (Profit on Sale)

40,000

Bank A/c (Sale) (Balancing Figure)

90,000

Balance c/d

2,00,000

3,40,000

3,40,000

WN3:

Provision for Depreciation Account

Dr.

Cr.

Particulars

Amount

(Rs)

Particulars

Amount

(Rs)

Asset A/c

60,000

Balance b/d

1,10,000

Balance c/d

1,50,000

Profit and Loss A/c (Depreciation charged during the year)

1,00,000

2,10,000

2,10,000


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