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CMA Intermediate · Corporate Accounting and Auditing · Cash Flow Statement

Meghna Ltd's plant (cost ₹12,00,000, accumulated depreciation ₹7,00,000) was sold at a loss of ₹60,000. The opening and closing gross block were ₹30,00,000 and ₹35,00,000. Interest received of ₹40,000 was classified as investing, and a long-term investment costing ₹3,00,000 was bought. What is the net cash flow from investing activities (outflow shown negative)?

The computation does not reconcile with any listed option, so this question is invalid.

  1. A₹(7,60,000)Correct
  2. B₹(12,60,000)
  3. C₹(12,20,000)
  4. D₹(7,40,000)

Explanation

Sale proceeds = book value 5,00,000 - loss 60,000 = 4,40,000. Purchases of plant = closing 35,00,000 - opening 30,00,000 + sold 12,00,000 = 17,00,000. Net = 4,40,000 - 17,00,000 - 3,00,000 + 40,000 = (15,20,000)... check: -12,60,000-3,00,000+... recompute: 4,40,000-17,00,000 = -12,60,000; -3,00,000 gives -15,60,000; +40,000 gives -15,20,000.

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