Question

Calculate Cash Flow from Investing Activities from the following particulars:

	1st April, 2022 (₹)	1st April, 2023 (₹)
Plant & Machinery (Written Down Value)	12,00,000	15,40,000

Information:

1. Depreciation charged during the year ₹ 2,20,000.
2. Plant & Machinery costing ₹ 2,40,000 on which ₹ 90,000 had accumulated as depreciation, was sold for ₹ 1,70,000.

Hint: Cash used for purchase ₹ 7,10,000 and cash inflow from sale ₹ 1,70,000.

Answer 1

Cash Flow from Investing Activities for the year ended 31st March, 2023.
Particulars	Amount (₹)
Outflow: Purchase of Plant & Machinery	(7,10,000)
Inflow: Sale of Plant & Machinery	1,70,000
Net Cash Used in Investing Activities	(5,40,000)

Working Notes:

Given:

• Opening WDV = ₹ 12,00,000
• Closing WDV = ₹ 15,40,000
• WDV of asset sold = ₹ 2,40,000 – ₹ 90,000
  = ₹ 1,50,000
• Depreciation = ₹ 2,20,000

To calculate the purchase of plants and machinery:

Closing WDV = Opening WDV − WDV of asset sold + Purchases − Depreciation

₹ 15,40,000 = ₹ 12,00,000 − ₹ 1,50,000 + Purchases − ₹ 2,20,000

₹ 15,40,000 = ₹ 8,30,000 + Purchases

∴ Purchases = ₹ 15,40,000 − ₹ 8,30,000

∴ Purchases = ₹ 7,10,000