Question

From the following particulars of Bharat Gas Limited, calculate Cash Flows from Investing Activities. Also, show the workings clearly, preparing the ledger accounts:

Balance Sheet of Bharat Gas Ltd., as on 31 March, 2016 and 31 March 2017
Particulars	Note No.	March 31 2017 (Rs.)	March 31 2016 (Rs.)
II) Assets
1. Non-current Assets
a) Fixed assets
i) Tangible assets	1	12,40,000	10,20,000
ii) Intangible assets	2	4,60,000	3,80,000
b) Non-current investments	3	3,60,000	2,60,000

Notes:

1. Tangible assets = Machinery 
2. Intangible assets = Patents

Notes to accounts:

	March 31 2017	March 31 2016
1. Tangible Assets
Machinery	12,40,000	10,20,000
2. Intangible Assets
Goodwill	3,00,000	1,00,000
Patents	1,60,000	2,80,000
	4,60,000	3,80,000
3. Non-current Investments
10% long-term investments	1,60,000	60,000
Investment in land	1,00,000	1,00,000
Shares of Amartex Ltd.	1,00,000	1,00,000
	3,60,000	2,60,000

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 costing 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 investments was received on March 31, 2017.
4. Amartax Ltd. paid Dividend @ 10% on its shares.
5. A plot of Land had been purchased for investment purposes and let out for commercial use, and rent received Rs. 30,000.

Answer 1

Cash flow from operating activities
Particulars	Amount (Rs.)	Amount (Rs.)
Cash Inflow
Receipts from sale of patents	1,00,000
Receipts from sale of machinery	50,000
Receipts from sale of 10% Invest.	1,00,000
Interest recd. on 10% Invest.	6,000
Dividend received on shares	10,000
Rent received from Land	30,000	2,96,000
Cash Outflow
Purchase of machinery	(4,40,000)
Purchase of 10% Investment	(1,80,000)
Purchase of goodwill	(2,00,000)	8,20,000
Net cash used in Investing Activities		5,24,000

 

Dr.	Patents Account		Cr.
Particulars	Amount (Rs.)	Particulars	Amount (Rs.)
To balance b/d	2,80,000	Profit and Loss (written off)	40,000
Profit and Loss  (Profit on sale)	20,000	By Bank (Purchases- Balancing figure)	1,00,000
		By balance c/d	1,60,000
	3,00,000		3,00,000

 

Dr.	Machinery A/c		Cr.
Particulars	Amount (Rs.)	Particulars	Amount (Rs.)
To balance b/d	10,20,000	By Bank A/c	50,000
To Bank (Purchases- Balancing figure)	4,40,000	By Profit and Loss A/c	30,000
		By Depreciation	1,40,000
		By balance c/d	12,40,000
	14,60,000		14,60,000

Loss on sale of machinery = ₹ 1,40,000 – ₹ 60,000 – ₹ 50,000

= ₹ 30,000

Dr.	10% Long-term Investment Account		Cr.
Particulars	Amount (Rs.)	Particulars	Amount (Rs.)
To balance b/d	60,000	By Bank A/c (B. Figure)	1,00,000
To Bank (Purchases)	1,80,000	By balance c/d	1,60,000
To Profit and Loss (Profit on sale)	20,000
	2,60,000		2,60,000