Question

Calculate Cash Flows from Investing Activities from the following information:

Particulars	31st March, 2022 (₹)	31st March, 2021 (₹)
Investments in Land	16,00,000	6,00,000
10% Long-Term Investments	2,50,000	4,00,000
Plant and Machinery	3,00,000	2,00,000
Goodwill	80,000	15,000

Additional information:

A machine costing ₹ 40,000 (depreciation provided thereon ₹ 12,000) was sold for ₹ 35,000. Depreciation charged during the year was ₹ 60,000.

Notes:

1. It is assumed that investments were sold on 31st March, 2022.
2. In case it is assumed that investments were sold on 1st April, 2021, interest would be ₹ 25,000, and Cash used in investing activities would be ₹ 10,43,000.

Answer 1

Cash Flow from Investing Activities for the year ended 31st March, 2022.
Particulars	Amount (₹)
Payment for Purchase of Land	(10,00,000)
Proceeds from sale of Long-term Investments (₹4,00,000 – ₹2,50,000)	1,50,000
Payment of Interest on Long-term Investments `("₹4,00,000" xx 10/100)`	40,000
Payment for Purchase of Plant and Machinery (W.N.)	(1,88,000)
Proceeds from Sale of Plant and Machinery	35,000
Payment for Purchase of Goodwill	(65,000)
Cash Used in Investing Activities	(10,28,000)

Working Note:

Dr.	PLANT AND MACHINERY ACCOUNT		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance b/d	2,00,000	By Bank A/c (Sale)	35,000
To Profit on Sale of Machinery A/c (Statement of Profit and Loss)	7,000	By Depreciation A/c	60,000
To Bank A/c (Purchase) (Balancing figure)	1,88,000	By Balance c/d	3,00,000
Total	3,95,000	Total	3,95,000