Class Notes

Class: XII Topic: Cash Flow Statement ( Investing Activities )

Subject: ACCOUNTANCY

Q. 1 From the following particulars, calculate cash flow from investing activities
Particulars Purchased Sold
Plant 4,40,000 50,000
Investments 1,80,000 1,00,000
Goodwill 2,00,000 -
Patents - 1,00,000
Interest received on debentures held as investment Rs. 6,000. Dividend received on shares held as investment
Rs. 10,000. A plot of land had been purchased for investment purposes and was let out for commercial use
and rent received was Rs. 30,000.
Solution:
Cash Flow From Investing Activities
Particulars Rs. Rs.
Proceeds from sale of plant 50,000
Proceeds from sale of investments 1,00,000
Proceeds from sale of patents 1,00,000
Interest received on investment (debentures) 6,000
Dividend received on shares 10,000
Rent received 30,000
Purchase of plant (4,40,000)
Purchase of investments (1,80,000)
Purchase of goodwill (2,00,000)
Net cash used in investing activities (5,24,000) (5,24,000)

Q.2 From the following information, calculate the amount of cash flow from Investing Activities:
Particulars 31st March, 2017 31st March, 2018
Plant and machinery 8,50,000 10,00,000
Non-current Investments 40,000 1,00,000
Land (At cost) 2,00,000 1,00,000
Additional information:
(i) Depreciation charged on Plant and Machinery Rs. 50,000.
(ii) Plant and Machinery with a book value of Rs. 60,000 was sold for Rs. 40,000.
(iii) Land was sold at a profit of Rs. 60,000.
(iv) No investment was sold during the year.

Solution:
Working Notes:
Land A/c
Particulars Amount Particulars Amount
To Balance b/d 2,00,000 By Cash A/c (Sale) 1,60,000
To Statement of Profit and Loss (Profit) 60,000 By Balance c/d 1,00,000
2,60,000 2,60,000

(2) Plant and Machinery A/c

Particulars Amount Particulars Amount
 To Balance b/d 8,50,000 By Depreciation 50,000
To Bank A/c (purchases) (Bal. fig.) 2,60,000 By Cash A/c (Sales) 40,000
By Statement of Profit & Loss (loss) 20,000
By Balance c/d 10,00,000
11,10,000 11,10,000

Cash Flow from Investing Activities

Particulars Rs. Rs.
Proceeds from sale of Plant and Machinery 40,000
Proceeds from sale of Land (Working Note 1) 1,60,000
Purchase of Plant and Machinery ( Working Note 2) (2,60,000)
Purchase of investments (60,000)
Net cash used in Investing Activities (1,20,000) (1,20,000)

Q.3 Calculate Cash Flow From Investing Activities from the following information:
Particulars 31st March, 2015 31st March, 2014
Investments in Land 16,00,000 6,00,000
10% Long-term Investments 2,50,000 4,00,000
Plant and Machinery 3,00,000 2,00,000
Goodwill 80,000 15,000
Additional information:
A machine costing Rs. 40,000(depreciation provided thereon Rs. 12,000) was sold for Rs. 35,000. Depreciation
charged during the year was Rs. 60,000.

Solution:
Working Note:
Plant and Machinery A/c
Particulars Amount Particulars Amount
To Balance b/d 2,00,000 By Cash A/c (Sale) 35,000
To Statement of P/L A/c. (Profit) 7,000 By Depreciation A/c 60,000
To Cash A/c (Purchases) (Bal. Figure) 1,88,000 By Balance c/d 3,00,000
3,95,000 3,95,000

Cash Flow From Investing Activities

Particulars Rs. Rs.
Cash Flow From Investing activities
Purchase of Land (10,00,000)
Proceeds from sale of Long-term Investments 1,50,000
Interest on Long-term Investment 40,000
Purchase of Plant and Machinery (1,88,000)
Proceeds from sale of Plant and Machinery 35,000
Purchase of Goodwill (65,000)
Net Cash used in Investing activities (10,28,000) 10,28,000
Solve the following questions:

Problem.1 Calculate Cash Flow From Investing Activities from the following information:
Purchase of Machinery 45,000
Goodwill purchased 18,000
Investment purchased 27,000
Sale of machinery 6,300
Investment sold 9,000
Patent sold 7,200
Interest received on debentures held as investment 720
Dividend received on shares held as investment 1,080
A piece of building was purchased as investment out of surplus. It was let out for commercial use and rent
received was Rs. 3,600. (Ans: Cash used in investing activities= Rs. 62,100)

Problem.2 Calculate Cash Flow From Investing Activities from the following information:
Particulars 31st March, 2018 31st March, 2017
Investments in factory premises 8,00,000 3,00,000
10% Long-term Investments 1,25,000 2,00,000
Plant and Machinery 1,50,000 1,00,000
Goodwill 40,000 7,500
Additional information:
A machine costing Rs. 20,000(depreciation provided thereon Rs. 6,000) was sold for Rs. 17,500. Depreciation
charged during the year was Rs. 30,000. (Ans: Cash used in Investing activities Rs. 5,14,000)

Problem.3 How will you disclose the items related in Cash Flow Statement?
2013 2014
Plant and Machinery 5,00,000 8,00,000
During the year 2014 Rs. 50,000 has been charged to Plant and Machinery and a piece of machinery costing
Rs. 12,000 (depreciation provided thereon Rs. 7,000) was sold at 60% profit on book value. (Ans: Cash used in
Investing activities Rs. 3,47,000)

Problem.4 From the following information, calculate cash flow from investing activities of NTPC Ltd.
Particulars 31st March, 2018 31st March, 2017
Investment @ 10% 10,00,000 5,00,000
Fixed assets 23,80,000 17,50,000
Additional information:
(i) Half of the investments held in the beginning of the year was sold at 10% profit.
(ii) Depreciation on fixed assets was Rs. 2,00,000 for the year.
(iii) Interest received on investment Rs. 70,000.
(iv) Dividend received on investments Rs. 50,000.
(Ans: Cash used in Investing activities Rs.11,85,000)
(The above content is developed from home: MKR)