Question

From the following details. calculate Cash Flow from Investing Activities

Particulars	Closing (₹)	Opening (₹)
Machinery (At Cost)	10,00,000	9,50,000
Accumulated Depreciation	1,50,000	1,10,000
Patents	2,00,000	3,00,000

Additional Information:
1. During the year, machine costing ₹ 90,000 with accumulated depreciation of ₹ 60,000 was sold for ₹        50,000.
2. Patents written off were ₹ 50,000 while a part of patents were sold at a profit of ₹ 40,000.

Answer 1

Cash Flow from Investing Activities
	Particulars		Amount (Rs)	Amount (Rs)
		Purchase of Machinery (WN1)	(1,40,000)
		Sale of Machinery	50,000
		Sale of Patents (WN3)	90,000	Nil
	Net Cash Used in Investing Activities			Nil

Working Notes:

WN1:

Machinery Account
Dr.					Cr.
Particulars		Amount (Rs)	Particulars	Amount (Rs)
Balance b/d		9,50,000	Provision for Depreciation A/c	60,000
Profit and Loss A/c (Profit on Sale)		20,000	Bank A/c (Sale)	50,000
Bank A/c (Purchase)		1,40,000	Balance c/d	10,00,000
		11,10,000		11,10,000

WN2:

Patents Account
Dr.					Cr.
Particulars		Amount (Rs)	Particulars	Amount (Rs)
Balance b/d		3,00,000	Patents Written off	50,000
Profit and Loss A/c (Profit on Sale)		40,000	Bank A/c (Sale) (Balancing Figure)	90,000
			Balance c/d	2,00,000
		3,40,000		3,40,000

WN3:

Provision for Depreciation Account
Dr.					Cr.
Particulars		Amount (Rs)	Particulars	Amount (Rs)
Asset A/c		60,000	Balance b/d	1,10,000
Balance c/d		1,50,000	Profit and Loss A/c (Depreciation charged during the year)	1,00,000
		2,10,000		2,10,000