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X Ltd. sold machinery hav ing a book v alue of Rs. 25,000 (on which accumulated depreciation of Rs. 5,000 had been charged) at a profit of Rs. 3,000.
The cash flow from investing activities will be:
  • a)
    Rs. 30,000
  • b)
    Rs. 23,000
  • c)
    Rs. 25,000
  • d)
    Rs. 28,000
Correct answer is option 'D'. Can you explain this answer?
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X Ltd. sold machinery hav ing a book v alue of Rs. 25,000 (on which ac...
Calculating Cash Flow from Investing Activities

Given information:
Book value of machinery = Rs. 25,000
Accumulated depreciation = Rs. 5,000
Profit on sale = Rs. 3,000

To calculate cash flow from investing activities, we need to consider the following:

1. Calculation of Sale Proceeds
The sale proceeds of the machinery will be the sum of its book value and the profit earned on the sale. Therefore, the sale proceeds will be:

Sale proceeds = Book value of machinery + Profit on sale
Sale proceeds = Rs. 25,000 + Rs. 3,000
Sale proceeds = Rs. 28,000

2. Calculation of Gain or Loss on Sale
We need to calculate the gain or loss on the sale of machinery. As the profit on sale is given as Rs. 3,000, we can calculate the gain or loss as follows:

Gain or loss on sale = Sale proceeds - Book value of machinery - Accumulated depreciation
Gain or loss on sale = Rs. 28,000 - Rs. 25,000 - Rs. 5,000
Gain or loss on sale = Rs. -2,000 (Negative sign indicates a loss)

3. Calculation of Cash Flow from Investing Activities
The cash flow from investing activities is the net cash inflow or outflow resulting from the sale of assets. As the machinery was sold at a profit, there is a net cash inflow. Therefore, the cash flow from investing activities will be:

Cash flow from investing activities = Sale proceeds - Book value of machinery
Cash flow from investing activities = Rs. 28,000 - Rs. 25,000
Cash flow from investing activities = Rs. 3,000

Therefore, the correct answer is option D) Rs. 28,000.
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Community Answer
X Ltd. sold machinery hav ing a book v alue of Rs. 25,000 (on which ac...
25000 + 3000 = Rs. 28000.
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X Ltd. sold machinery hav ing a book v alue of Rs. 25,000 (on which accumulated depreciation of Rs. 5,000 had been charged) at a profit of Rs. 3,000.The cash flow from investing activities will be:a)Rs. 30,000b)Rs. 23,000c)Rs. 25,000d)Rs. 28,000Correct answer is option 'D'. Can you explain this answer?
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X Ltd. sold machinery hav ing a book v alue of Rs. 25,000 (on which accumulated depreciation of Rs. 5,000 had been charged) at a profit of Rs. 3,000.The cash flow from investing activities will be:a)Rs. 30,000b)Rs. 23,000c)Rs. 25,000d)Rs. 28,000Correct answer is option 'D'. Can you explain this answer? for Humanities/Arts 2024 is part of Humanities/Arts preparation. The Question and answers have been prepared according to the Humanities/Arts exam syllabus. Information about X Ltd. sold machinery hav ing a book v alue of Rs. 25,000 (on which accumulated depreciation of Rs. 5,000 had been charged) at a profit of Rs. 3,000.The cash flow from investing activities will be:a)Rs. 30,000b)Rs. 23,000c)Rs. 25,000d)Rs. 28,000Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for Humanities/Arts 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for X Ltd. sold machinery hav ing a book v alue of Rs. 25,000 (on which accumulated depreciation of Rs. 5,000 had been charged) at a profit of Rs. 3,000.The cash flow from investing activities will be:a)Rs. 30,000b)Rs. 23,000c)Rs. 25,000d)Rs. 28,000Correct answer is option 'D'. Can you explain this answer?.
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