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Question
Calculate Cash Flow from Investing Activities from the following information:
|
Particular |
31st March, (₹) |
31st March, |
| Investment in Land |
3,00,000 |
3,00,000 |
| Shares in Damodar Ltd. | 1,50,000 | 1,50,000 |
| 12% Long-term Investments | 80,000 | 50,000 |
| Plant and Machinery | 7,50,000 | 6,00,000 |
| Patents | 70,000 | 1,00,000 |
| Goodwill |
1,50,000 |
1,00,000 |
Additional Information:
1. A piece of land was purchased as an investment out of surplus. It was let out for commercial purpose and the rent received was ₹ 20,000.
2. Dividend received from Damodar Ltd. @ 12%.
3. Patents written off to the extent of ₹ 20,000. Some patents were sold at a profit of ₹ 10,000.
4. A machine costing ₹ 80,000 (depreciation provided thereon ₹ 30,000) was sold for ₹ 35,000. Depreciation charged during the year was ₹ 70,000.
5. During the year 12% investments were purchased for ₹ 1,00,000 and some investments were sold at a profit of ₹ 10,000. Interest on investments for the year was duly received.
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Solution
|
Cash Flow from Investing Activities |
|||
|
|
Particulars |
Amount (₹) |
Amount (₹) |
|
|
Purchase of Plant and Machinery |
(2,70,000) |
|
|
|
Purchase of Investment |
(1,00,000) |
|
|
|
Purchase of Goodwill |
(50,000) |
|
|
|
Rent Received |
20,000 |
|
|
|
Dividend Received |
18,000 |
|
|
|
Sale of Plant and Machinery |
35,000 |
|
|
|
Sale of Investment |
80,000 |
|
|
|
Interest on Investments |
6,000 |
|
|
|
Sale of Patents |
20,000 |
|
|
|
Net Cash Used in Investing Activities |
|
(2,41,000) |
Working Notes:
WN1: Computation of Interest on Investments
Interest on 12% Long-term Investments = `(50,000 xx 12/100) = 6,000`
WN2
|
Patents Account |
|||
|
Dr. |
Cr. |
||
|
Particulars |
Amount (₹) |
Particulars |
Amount (₹) |
|
Balance b/d |
1,00,000 |
Profit and Loss A/c (Written-off) |
20,000 |
|
Profit and Loss A/c (Profit on Sale) |
10,000 |
Bank A/c (Sale- Bal. Fig.) |
20,000 |
|
|
|
Balance c/d |
70,000 |
|
|
1,10,000 |
|
1,10,000 |
WN3
|
12% Long-Term Investments Account |
|||
|
Dr. |
Cr. |
||
|
Particulars |
Amount (₹) |
Particulars |
Amount (₹) |
|
Balance b/d |
50,000 |
Bank A/c (Sale- Bal. Fig.) |
80,000 |
|
Bank A/c (Purchase) |
1,00,000 |
Balance c/d |
80,000 |
|
Profit and Loss A/c (Profit on Sale) |
10,000 |
|
|
|
|
1,60,000 |
|
1,60,000 |
WN3
|
Plant and Machinery Account |
|||
|
Dr. |
Cr. |
||
|
Particulars |
Amount (₹) |
Particulars |
Amount (₹) |
|
Balance b/d |
6,00,000 |
Depreciation A/c |
70,000 |
|
Bank A/c (Purchase- Bal. Fig.) |
2,70,000 |
Bank A/c (Sale) |
35,000 |
|
|
|
Profit and Loss A/c (Loss on Sale) |
15,000 |
|
|
|
Balance c/d |
7,50,000 |
|
|
8,70,000 |
|
8,70,000 |
