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

Sundaram Ltd's fixed assets (at cost) were ₹8,00,000 opening and ₹9,50,000 closing. Accumulated depreciation was ₹2,00,000 opening and ₹2,30,000 closing. During the year, an asset of cost ₹1,00,000 with accumulated depreciation ₹70,000 was sold at a loss of ₹10,000. Funds from sale and funds applied to purchase of fixed assets respectively are:

Sale proceeds are ₹20,000 and purchases are ₹2,50,000. The asset's book value of ₹30,000 less the ₹10,000 loss gives proceeds, while the cost account roll-forward (9,50,000 minus 8,00,000 plus 1,00,000 sold) gives purchases.

  1. A₹20,000 and ₹2,50,000Correct
  2. B₹30,000 and ₹2,50,000
  3. C₹20,000 and ₹1,50,000
  4. D₹30,000 and ₹1,50,000

Explanation

Book value of asset sold = 1,00,000 - 70,000 = 30,000; sale proceeds = 30,000 - 10,000 loss = 20,000. Closing cost 9,50,000 = 8,00,000 + purchases - 1,00,000, so purchases = 2,50,000. The ₹30,000 option wrongly uses book value as proceeds.

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