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CMA Intermediate · Financial Management and Business Data Analytics · Fund Flow Statement - Preparation and Analysis

Kaveri Traders' Provision for Depreciation on machinery rose from ₹40,000 to ₹55,000 during the year. A machine with original cost ₹30,000 and accumulated depreciation ₹18,000 was sold for ₹9,000. What is the depreciation charged to Profit and Loss Account for the year, to be added back as a non-fund item in computing funds from operations?

Depreciation charged is ₹33,000. The provision grew by ₹15,000 net, but ₹18,000 of accumulated depreciation was removed on the machine sold, so the year's charge must be 15,000 plus 18,000, which equals ₹33,000.

  1. A₹15,000
  2. B₹27,000Correct
  3. C₹33,000
  4. D₹3,000

Explanation

Closing provision = opening + charge - provision on assets sold. 55,000 = 40,000 + charge - 18,000, so charge = 33,000 - ... recompute: charge = 55,000 - 40,000 + 18,000 = 33,000. Hence the correct figure is ₹33,000; the ₹15,000 option ignores the provision released on sale.

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