CS Executive · Corporate Accounting and Financial Management · Cash Flows
Meera Ltd purchased plant for ₹3,00,000 in cash and sold old plant (book value ₹50,000) for ₹60,000 cash. Which statement gives the correct net cash flow from investing activities for these two items?
Net cash outflow from investing activities is ₹2,40,000. The plant purchase is an outflow of ₹3,00,000, and actual sale proceeds of ₹60,000 are an inflow; book value of the old plant is irrelevant to cash flow.
- ANet outflow ₹2,40,000Correct
- BNet outflow ₹2,50,000
- CNet inflow ₹60,000
- DNet outflow ₹3,10,000
Explanation
The purchase is an outflow of ₹3,00,000 and the sale proceeds are an inflow of ₹60,000 (cash received, not book value). Net = 3,00,000 - 60,000 = ₹2,40,000 outflow. Using book value gives ₹2,50,000, which is wrong.
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