Question

Khushi Ltd. incurred a loss of ₹ 2,00,000 for the year ended 31^st March, 2025. This loss was arrived at after considering the below-given items, including depreciation charged on Plant & Machinery represented by “??”

		₹
(i)	Interest on Short-Term Loans & Advances	5,500
(ii)	Gain on sale of Plant & Machinery	37,500
(iii)	Provision for Tax made during the year	2,10,000
(iv)	Depreciation on Plant & Machinery	??

Additional Information:

(a) During the year 2024-25: 
A machine having a book value of ₹ 1,00,000 was sold for ₹ 1,37,500, and a machine costing ₹ 5,50,000 was purchased.

(b) An extract of Balance Sheet of the company as at 31^st March, 2024, and as at 31^st March, 2025:

Particulars	31st March, 2025 (₹)	31st March, 2024 (₹)
Plant and Machinery (at Net Value)	15,00,000	12,25,000
Provision for Depreciation	4,00,000	2,75,000
Short-term Loans and Advances	1,22,500	27,500
Cash and Cash Equivalents	60,000	75,000
Prepaid Expenses	12,500	5,000

You are required to calculate for the year 2024-25:

1. The Net operating profit of the company before working capital changes.
2. Cash from Investing Activities.

Hint:

Since Provision for Depreciation A/c is maintained, Plant & Machinery A/c will show Gross Value, i.e., at Original Cost.

Opening Balance = ₹ 12,25,000 + Accumulated Deprecation ₹ 2,75,000

= ₹ 15,00,000

Closing Balance = ₹ 15,00,000 + Accumulated Depreciation ₹ 4,00,000

= ₹ 19,00,000

Answer 1

Cash Flow Statement for the year ended 31st March, 2025.
Particulars	Amount (₹)	Amount (₹)
A. Cash flow from Operating Activities:
Loss after tax		(2,00,000)
Add:
Provision for tax	2,10,000
Depreciation on Plant & Machinery	1,75,000	3,85,000
Less:
Gain on sale of Plant & Machinery (₹ 1,37,500 − ₹ 1,00,000)	(37,500)
Interest on Short-term Loans & Advances	(5,500)	(43,000)
Net Operating Profit before Working Capital Changes		1,42,000
Net cash from Operating Activities (A)		1,42,000
B. Cash flow from Investing Activities:
Add:
Sale proceeds of Plant & Machinery	1,37,500
Interest received on Short-term Loans & Advances	5,500	1,43,000
Less:
Purchase of Plant & Machinery	(5,50,000)
Short-term Loans & Advances (₹ 1,22,500 − ₹ 27,500)	(95,000)	(6,45,000)
Net cash used in Investing Activities (B)		(5,02,000)

Working Note 1: Calculation of Depreciation on Plant & Machinery.

Particulars	Amount (₹)	Amount (₹)
Opening Gross Block (Net ₹ 12,25,000 + Prov. ₹ 2,75,000)		15,00,000
Add: Purchases during the year	5,50,000
Less: Closing Gross Block (Net ₹ 15,00,000 + Prov. ₹ 4,00,000)	(19,00,000)	(13,50,000)
Cost of Asset Sold		1,50,000
Less: Book Value of Asset Sold (given)		(1,00,000)
Accumulated Depreciation on Asset Sold		50,000

Working Note 2:

Dr.	Provision for Depreciation A/c		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Asset Sold	50,000	By Opening Balance	2,75,000
To Closing Balance	4,00,000	By Depreciation (balancing figure)	1,75,000
Total	4,50,000	Total	4,50,000