Question

Calculate Cash Flow from Investing Activities from the following particulars: 

Additional Information: 
Depreciation charged during the year ₹1,70,000. 
Plant & Machinery having written down value of ₹2,20,000 was sold for ₹2,50,000. 
 

Hint:

Purchase of fixed assets is a cash outflow, while sale of fixed assets is a cash inflow under Investing Activities.

Answer 1

Step 1: Calculation of Purchases of Plant & Machinery \[ \text{Closing Balance} = \text{Opening Balance} + \text{Purchases} - \text{WDV of Asset Sold} - \text{Depreciation} \] \[ 17,20,000 = 14,40,000 + \text{Purchases} - 2,20,000 - 1,70,000 \] \[ \text{Purchases} = 17,20,000 - 14,40,000 + 2,20,000 + 1,70,000 \] \[ \text{Purchases} = ₹6,70,000 \] Step 2: Cash Flow from Investing Activities \[ \text{Cash Inflow from Sale of Plant} = ₹2,50,000 \] \[ \text{Cash Outflow for Purchase of Plant} = ₹6,70,000 \] \[ \text{Net Cash Flow from Investing Activities} = 2,50,000 - 6,70,000 = (-₹4,20,000) \]