Advertisements
Advertisements
Question
The following information has been extracted from the books of Lata Ltd.:
| Particulars | 31st March, 2024 (₹) | 31st March, 2023 (₹) |
| Machinery (Cost) | 70,00,000 | 50,00,000 |
| Accumulated Depreciation | 10,00,000 | 8,00,000 |
Additional Information:
- During the year, a piece of machinery costing ₹ 1,40,000 on which accumulated depreciation was ₹ 90,000, was sold at a gain of ₹ 10,000.
- Depreciation charged during the year amounted to ₹ 2,90,000. Calculate Cash Flows from Investing Activities.
Ledger
Advertisements
Solution
Cash Flow from Investing Activities
| Particulars | Amount (₹) |
|---|---|
| Proceeds from Sale of Machinery | 60,000 |
| Payment for Purchase of Machinery | (21,40,000) |
| Net Cash Used in Investing Activities | (20,80,000) |
Working Notes:
1. Calculation of Sale Proceeds of Machinery
Cost of machinery sold = ₹ 1,40,000
Less: Accumulated Depreciation on it = (₹ 90,00,0)
Book Value of machinery sold = ₹ 50,000
Add: Gain on Sale = ₹ 10,000
Sale Proceeds (Cash Inflow) = ₹ 50,000 + ₹ 10,000 = ₹ 60,000
2. Ledger Accounts to find Purchases
Machinery Account (At Cost)
| Debit (Particulars) | Amount (₹) | Credit (Particulars) | Amount (₹) |
|---|---|---|---|
| To Balance b/d (Opening) | 50,00,000 | By Accumulated Depreciation A/c | 90,000 |
| To Gain on Sale of Machinery A/c | 10,000 | By Bank A/c (Sale Proceeds) | 60,000 |
| To Bank A/c (Purchase - Bal. Fig.) | 21,40,000 | By Balance c/d (Closing) | 70,00,000 |
| Total | 71,50,000 | Total | 71,50,000 |
Accumulated Depreciation Account
| Debit (Particulars) | Amount (₹) | Credit (Particulars) | Amount (₹) |
|---|---|---|---|
| To Machinery A/c (Dep. on sold item) | 90,000 | By Balance b/d (Opening) | 8,00,000 |
| To Balance c/d (Closing) | 10,00,000 | By Depreciation charged during the year | 2,90,000 |
| Total | 10,90,000 | Total | 10,90,000 |
shaalaa.com
Is there an error in this question or solution?
