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{"id":4881,"date":"2021-06-19T20:37:11","date_gmt":"2021-06-19T14:52:11","guid":{"rendered":"https:\/\/eponlinestudy.com\/?p=4881"},"modified":"2021-06-19T20:37:11","modified_gmt":"2021-06-19T14:52:11","slug":"cash-flow-statement-investing-activities-sales-of-fixed-assets-and-investment-purchase-of-fixed-assets","status":"publish","type":"post","link":"https:\/\/eponlinestudy.com\/cash-flow-statement-investing-activities-sales-of-fixed-assets-and-investment-purchase-of-fixed-assets\/","title":{"rendered":"Cash Flow Statement | Investing Activities | Fixed assets | Investment"},"content":{"rendered":"

\"\"<\/p>\n

\u00a0<\/span><\/span><\/p>\n

\u00a0<\/span><\/span><\/p>\n

\u00a0<\/span><\/span><\/p>\n

Preparation of Cash Flow Statement <\/span><\/b><\/h3>\n

There are two methods to prepare cash flow statement; they are:<\/span><\/p>\n

(1) Direct method<\/span><\/p>\n

(2) Indirect method <\/span><\/p>\n

\u00a0<\/span><\/p>\n

Both methods have three activities; they are:<\/span><\/p>\n

(a) Operating activities <\/span><\/p>\n

(b) Investing activities<\/span><\/p>\n

(c) Financing activities<\/span><\/p>\n

\u00a0<\/span><\/p>\n

Keep in Mind (KIM) <\/span><\/b><\/p>\n\n\n\n\n
\n

Only operating activities are difference between direct methods and indirect method.<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Investing activities and financing activities are same in both methods. <\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/b>\u00a0<\/span><\/span><\/p>\n

\u00a0<\/span><\/span><\/p>\n

Investing Activities in Cash Flow Statement\u00a0<\/span><\/b><\/b><\/h2>\n

It is based on non-current assets or fixed assets (assets side of balance sheet)<\/span><\/b><\/span><\/p>\n

Purchase and sales of non-current assets (fixed assets and long-term assets) are calculated in investing activities. <\/span><\/p>\n

Any increase in assets mean purchase of assets, it is outflow for the company. <\/span><\/p>\n

Any decrease in assets mean sales or depreciation of assets. <\/span><\/p>\n

It is inflow for the company. <\/span><\/p>\n

If there is depreciation, loss, profit, purchase and sales fixed assets in income statement or profit and loss account, working notes should be prepared. <\/span><\/p>\n

Plant and machinery <\/span><\/p>\n

Land and building <\/span><\/p>\n

Furniture and fitting<\/span><\/p>\n

Equipment <\/span>\u00a0<\/span><\/p>\n

Investment<\/span><\/p>\n

Cash flow Statement<\/span><\/b><\/p>\n

Direct Method<\/span><\/i><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Amount<\/span><\/p>\n<\/td>\n

\n

Amount<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

CASH FROM INVESTING ACTIVITIES<\/span><\/b><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Cash inflow:<\/span><\/b><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Sales of plant and machinery <\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Sales of land and building <\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Sales of equipment <\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Sales of investment<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Loan from subsidiary company<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Cash outflow:<\/span><\/b><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Purchase of plant and machinery <\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

(xxx)<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Purchase of land and building<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

(xxx)<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Purchase of equipment\u00a0 <\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

(xxx)<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Purchase of investment<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

(xxx)<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Drawings<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

(xxx)<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

Net cash from investing activities (B)<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00b1 xxxx<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/b><\/p>\n

Keep in Mind (KIM) <\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n

Sales of plant and machinery mean cash inflow.<\/span><\/p>\n<\/td>\n

\n

Purchase of plant and machinery mean cash outflow.<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Sales of land and building mean cash inflow.<\/span><\/p>\n<\/td>\n

\n

Purchase of land and building mean cash outflow.<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Sales of furniture mean cash inflow.<\/span><\/p>\n<\/td>\n

\n

Purchase of furniture mean cash outflow.<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Sales of investment mean cash inflow.<\/span><\/p>\n<\/td>\n

\n

Purchase of investment means cash outflow.<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/p>\n

Never charge depreciation on investment.<\/b><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Under direct method, no entry for profit or loss of assets.<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Under direct method, no entry for depreciation of assets.<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Drawings \u00a0\u00a0 = beginning capital + net income \u2013 ending capital <\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Dividends<\/sup> and interest received may be inflow of operative activity<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/p>\n

If purchase and sales of particular fixed asset is given, no need to prepare ledger of working note.<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

 <\/p>\n

\"\"<\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span>\u00a0<\/span><\/p>\n

Here, Amount = Rs = $ = \u00a3 = \u20ac = <\/span>\u20b9<\/span> = Af = <\/span>\u09f3 <\/span>= Nu = Rf = <\/span>\u0dbb\u0dd4<\/span> = Br = P = Birr = Currency of your country<\/span>\u00a0 <\/span><\/p>\n

PROBLEM: 2A<\/span><\/b><\/p>\n

The following extracted balances are taken from ABC Company Ltd:<\/span><\/p>\n\n\n\n\n\n\n\n\n
\n

Particulars <\/span><\/p>\n<\/td>\n

\n

1 January<\/span><\/p>\n<\/td>\n

\n

31 December<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Plant and machinery <\/span><\/p>\n<\/td>\n

\n

7,50,000<\/span><\/p>\n<\/td>\n

\n

10,50,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Investment <\/span><\/p>\n<\/td>\n

\n

1,56,000<\/span><\/p>\n<\/td>\n

\n

56,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Land <\/span><\/p>\n<\/td>\n

\n

10,00,000<\/span><\/p>\n<\/td>\n

\n

8,00,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Equipment <\/span><\/p>\n<\/td>\n

\n

1,50,000<\/span><\/p>\n<\/td>\n

\n

1,50,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Furniture\u00a0 <\/span><\/p>\n<\/td>\n

\n

1,10,000<\/span><\/p>\n<\/td>\n

\n

60,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Required: Net cash from investing activities <\/span><\/p>\n

[Answer:\u00a0 ($50,000)<\/span><\/i><\/p>\n

SOLUTION <\/span><\/b><\/p>\n

Explain,<\/span><\/i><\/p>\n

Plant and machinery has increased; asset increased means purchase of asset; it is cash outflow.<\/span><\/i><\/p>\n

Investment has decreased; asset decreased means sales of asset; it is cash inflow.<\/span><\/i><\/i><\/p>\n

Land<\/span><\/i> has decreased; asset decreased means sales of asset; it is cash inflow.<\/span><\/i><\/p>\n

Equipment has equal value in both years; neither inflow nor outflow (no entry)<\/span><\/i><\/p>\n

Furniture<\/span><\/i> has decreased; asset decreased means sales of asset; it is cash inflow.<\/span><\/i><\/p>\n

\u00a0<\/span><\/b><\/p>\n

Cash flow Statement<\/span><\/b><\/p>\n

Direct Method<\/span><\/i><\/p>\n\n\n\n\n\n\n\n\n\n\n\n
\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Amount<\/span><\/p>\n<\/td>\n

\n

Amount<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

CASH FROM INVESTING ACTIVITIES<\/span><\/b><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Cash inflow:<\/span><\/b><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Sales of investment<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

100,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Sales of land<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

200,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Sales of furniture <\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

50,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Cash outflow:<\/span><\/b><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Purchase of plant and machinery <\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

(300,000)<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Net cash from investing activities (B)<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

(50,000)<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

Keep in Mind <\/span><\/b><\/p>\n\n\n\n\n\n
\n

There are two options of decrease in asset:<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

First, decrease in asset may be depreciation; no entry of depreciation in direct method of cash flow statement.<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Second, decrease in asset may be sales of asset; it increases cash viz cash inflow.<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

#####<\/span><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n

Click on link for YouTube<\/span> videos<\/span><\/strong><\/p>\n<\/td>\n<\/tr>\n

\n

Accounting for Share<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/889jkz<\/span><\/strong><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Share in Nepali<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/k99jkz<\/span><\/strong><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Debentures<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/yeakkz<\/span><\/strong><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Final Accounts: Class 12<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/e89jkz<\/span><\/strong><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Final Accounts in Nepali<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/w89jkz<\/span><\/strong><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Work Sheet<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/579jkz<\/span><\/strong><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Ratio Analysis (Accounting Ratio)<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/4fakkz<\/span><\/strong><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Fund Flow Statement<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/wiakkz<\/span><\/strong><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Cash Flow Statement<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/8gakkz<\/span><\/strong><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Theory Accounting Xii<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/nfakkz<\/span><\/strong><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Theory: Cost Accounting<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/tfakkz<\/span><\/strong><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Cost Accounting<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/p29jkz<\/span><\/strong><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

LIFO\u2212FIFO<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/dgakkz<\/span><\/strong><\/span><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Cost Sheet, Unit Costing<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/w49jkz<\/span><\/strong><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Cost Reconciliation Statement<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/829jkz<\/span><\/strong><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

#####<\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n

Here, Amount = Rs = $ = \u00a3 = \u20ac = <\/span>\u20b9<\/span> = Af = <\/span>\u09f3 <\/span>= Nu = Rf = <\/span>\u0dbb\u0dd4<\/span> = Br = P = Birr = Currency of your country<\/span>\u00a0 <\/span><\/p>\n

PROBLEM: 2B<\/span><\/b><\/p>\n

The following extracted balances are taken from ABC Company Ltd:<\/span><\/p>\n\n\n\n\n\n\n
\n

Particulars <\/span><\/p>\n<\/td>\n

\n

1 January<\/span><\/p>\n<\/td>\n

\n

31 December<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Plant and machinery <\/span><\/p>\n<\/td>\n

\n

7,50,000<\/span><\/p>\n<\/td>\n

\n

10,50,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Land and building <\/span><\/p>\n<\/td>\n

\n

10,00,000<\/span><\/p>\n<\/td>\n

\n

8,00,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Furniture\u00a0 <\/span><\/p>\n<\/td>\n

\n

1,10,000<\/span><\/p>\n<\/td>\n

\n

60,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Additional information: <\/span><\/p>\n

(a) Machine value $70,000 with accumulated depreciation $30,000 was sold for $50,000.<\/span><\/p>\n

(b) Land and building sold at a profit $80,000 where depreciation was $50,000<\/span><\/p>\n

(c) Furniture sold at a loss $4,000<\/span><\/p>\n

Required: cash from investing activities<\/span><\/p>\n

[Answer: ($44,000)]<\/span><\/i><\/p>\n

SOLUTION: <\/span><\/b><\/p>\n

Given and working note: <\/span><\/i><\/p>\n\n\n\n\n\n\n
\n

Accumulated Depn<\/sup><\/span><\/i><\/p>\n<\/td>\n

\n

=<\/span><\/i><\/p>\n<\/td>\n

\n

Original cost \u2013 Book salvage value<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

30,000<\/span><\/i><\/p>\n<\/td>\n

\n

=<\/span><\/i><\/p>\n<\/td>\n

\n

70,000 \u2013 BSV <\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

BSV<\/span><\/i><\/p>\n<\/td>\n

\n

=<\/span><\/i><\/p>\n<\/td>\n

\n

70,000 \u2013 30,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

=<\/span><\/i><\/p>\n<\/td>\n

\n

$40,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/i><\/p>\n

Profit\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 = Cash salvage value \u2013 Book salvage value\u00a0 \u00a0 = 50,000 \u2013 40,000\u00a0 \u00a0\u00a0\u00a0\u00a0 = $10,0001<\/sup><\/span><\/i><\/p>\n

\u00a0<\/span><\/i><\/p>\n

Plant and Machinery Account <\/span><\/i><\/p>\n\n\n\n\n\n\n\n\n
\n

Particulars <\/span><\/i><\/p>\n<\/td>\n

\n

Amount<\/span><\/i><\/p>\n<\/td>\n

\n

Particulars <\/span><\/i><\/p>\n<\/td>\n

\n

Amount<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

To Beginning Balance <\/span><\/i><\/p>\n<\/td>\n

\n

7,50,000<\/span><\/i><\/p>\n<\/td>\n

\n

By Bank (Sold, CSV) <\/span><\/i><\/p>\n<\/td>\n

\n

50,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

To Profit and Loss (Profit)<\/span><\/i><\/p>\n<\/td>\n

\n

10,000<\/span><\/i><\/p>\n<\/td>\n

\n

By Depreciation on sold<\/span><\/i><\/p>\n<\/td>\n

\n

30,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

To Bank (Purchase, b\/f<\/span>)<\/span><\/i><\/p>\n<\/td>\n

\n

3,70,000<\/span><\/i><\/i><\/p>\n<\/td>\n

\n

By Profit and Loss \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/i><\/p>\n<\/td>\n

\n

\u2013<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

By Ending Balance <\/span><\/i><\/p>\n<\/td>\n

\n

10,50,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

11,30,000<\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

11,30,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/i><\/b><\/p>\n

Land and Building Account <\/span><\/i><\/p>\n\n\n\n\n\n\n\n
\n

Particulars <\/span><\/i><\/p>\n<\/td>\n

\n

Amount<\/span><\/i><\/p>\n<\/td>\n

\n

Particulars <\/span><\/i><\/p>\n<\/td>\n

\n

Amount<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

To Beginning balance <\/span><\/i><\/p>\n<\/td>\n

\n

10,00,000<\/span><\/i><\/p>\n<\/td>\n

\n

By Bank (Sold, CSV, b\/f)<\/span><\/span><\/i><\/p>\n<\/td>\n

\n

230,000<\/span><\/i><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

To Profit and Loss (Profit)<\/span><\/i><\/p>\n<\/td>\n

\n

80,000<\/span><\/i><\/p>\n<\/td>\n

\n

By Depreciation (for the year)<\/span><\/i><\/p>\n<\/td>\n

\n

50,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

To Bank (Purchase)\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/i><\/p>\n<\/td>\n

\n

Nil <\/span><\/i><\/p>\n<\/td>\n

\n

By Ending balance <\/span><\/i><\/p>\n<\/td>\n

\n

8,00,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

10,80,000<\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

10,80,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/i><\/b><\/p>\n

Furniture Account <\/span><\/i><\/p>\n\n\n\n\n\n\n\n\n
\n

Particulars <\/span><\/i><\/p>\n<\/td>\n

\n

Amount<\/span><\/i><\/p>\n<\/td>\n

\n

Particulars <\/span><\/i><\/p>\n<\/td>\n

\n

Amount<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

To Beginning balance <\/span><\/i><\/p>\n<\/td>\n

\n

110,000<\/span><\/i><\/p>\n<\/td>\n

\n

By Bank (Sold, CSV, b\/f<\/span>)<\/span><\/i><\/p>\n<\/td>\n

\n

46,000<\/span><\/i><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

To Bank (Purchase)\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/i><\/p>\n<\/td>\n

\n

Nil<\/span><\/i><\/p>\n<\/td>\n

\n

By Depreciation (for the year)<\/span><\/i><\/p>\n<\/td>\n

\n

Nil<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

By Profit and Loss (Loss)<\/span><\/i><\/p>\n<\/td>\n

\n

4,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

By Ending balance <\/span><\/i><\/p>\n<\/td>\n

\n

60,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

110,000<\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

110,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

Now, <\/span><\/p>\n

Cash flow Statement<\/span><\/b><\/p>\n

Direct Method<\/span><\/i><\/p>\n\n\n\n\n\n\n\n\n\n\n\n
\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Amount<\/span><\/p>\n<\/td>\n

\n

Amount<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

CASH FROM INVESTING ACTIVITIES<\/span><\/b><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Cash inflow:<\/span><\/b><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Sales of plant and machinery<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

50,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Sales of land and building<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

230,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Sales of furniture <\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

46,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Cash outflow:<\/span><\/b><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Purchase of plant and machinery <\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

(370,000)<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Net cash from investing activities (B)<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

(44,000)<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n

###########<\/span><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n

Click on the link for <\/span>YouTube<\/span><\/b> videos<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Accounting Equation<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/c89jkz<\/span><\/b><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Journal Entries in Nepali<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/uaakkz<\/span><\/b><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Journal Entries<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/8aakkz<\/span><\/b><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Journal Entry and Ledger<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/caakkz<\/span><\/b><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Ledger<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/haakkz<\/span><\/b><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Subsidiary Book<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/399jkz<\/span><\/b><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Cashbook<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/889jkz<\/span><\/b><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Trial Balance and Adjusted Trial Balance<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/c59jkz<\/span><\/b><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Bank Reconciliation Statement (BRS)<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/q59jkz<\/span><\/b><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Depreciation<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/ugakkz<\/span><\/b><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Click on the link for <\/span>YouTube<\/span> videos chapter wise\u00a0 <\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Financial Accounting and Analysis (All videos)<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/jlersz<\/span><\/b><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Accounting Process<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/mlersz<\/span><\/b><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Accounting for Long Lived Assets<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/plersz<\/span><\/b><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Analysis of Financial Statement<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/slersz<\/span><\/b><\/a><\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

###########<\/span><\/p>\n

\u00a0<\/span><\/b><\/p>\n

\u00a0<\/span><\/p>\n

Here, Amount = Rs = $ = \u00a3 = \u20ac = <\/span>\u20b9<\/span> = Af = <\/span>\u09f3 <\/span>= Nu = Rf = <\/span>\u0dbb\u0dd4<\/span> = Br = P = Birr = Currency of your country<\/span>\u00a0 <\/span><\/p>\n

PROBLEM: 2C<\/span><\/b><\/p>\n

Following information is available:<\/span><\/p>\n\n\n\n\n\n\n
\n

Asset<\/span><\/p>\n<\/td>\n

\n

Year 2020<\/span><\/p>\n<\/td>\n

\n

Year 2021<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Fixed assets<\/span><\/p>\n<\/td>\n

\n

6,00,000<\/span><\/p>\n<\/td>\n

\n

800,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Accumulated depreciation<\/span><\/p>\n<\/td>\n

\n

90,000<\/span><\/p>\n<\/td>\n

\n

120,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

8% Investment<\/span><\/p>\n<\/td>\n

\n

1,56,000<\/span><\/p>\n<\/td>\n

\n

56,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Additional information:<\/span><\/p>\n

(a) Fixed assets costing of $100,000 with accumulated depreciation $15,000 was sold for $60,000.<\/span><\/p>\n

(b) Investment was sold for $102,000<\/span><\/p>\n

Required: (a) Accumulated depreciation account; (b) Fixed assets account; (c) Net cash from investing activities <\/span><\/p>\n

[Answer: Depn for the year = $45,000; Purchased = $300,000;<\/span><\/i><\/p>\n

NCFIA = ($174,000) ]<\/span><\/i><\/p>\n

SOLUTION\u00a0 <\/span><\/b><\/p>\n

Accumulated Depreciation Account <\/span><\/b><\/p>\n\n\n\n\n\n\n\n
\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Amount<\/span><\/p>\n<\/td>\n

\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Amount<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

To Depreciation on sold<\/span><\/p>\n<\/td>\n

\n

15,000<\/span><\/p>\n<\/td>\n

\n

By Opening balance <\/span><\/p>\n<\/td>\n

\n

90,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

To Closing balance <\/span><\/p>\n<\/td>\n

\n

120,000<\/span><\/p>\n<\/td>\n

\n

By Income statement <\/span><\/i><\/p>\n<\/td>\n

\n

45,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

(depreciation for 2021 (b\/f) <\/span><\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

135,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

135,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/b><\/p>\n

Fixed Assets Account <\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n
\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Amount<\/span><\/p>\n<\/td>\n

\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Amount<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

To Beginning Balance <\/span><\/p>\n<\/td>\n

\n

600,000<\/span><\/p>\n<\/td>\n

\n

By Bank (Sold\/CSV)<\/span><\/p>\n<\/td>\n

\n

60,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

To Profit and Loss (Profit)<\/span><\/p>\n<\/td>\n

\n

Nil <\/span><\/p>\n<\/td>\n

\n

By Depreciation on sold<\/span><\/p>\n<\/td>\n

\n

15,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

To Bank (Purchase, b\/f<\/span>)<\/span><\/p>\n<\/td>\n

\n

300,000<\/span><\/p>\n<\/td>\n

\n

By Profit and Loss \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/p>\n<\/td>\n

\n

25,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

By Ending Balance <\/span><\/p>\n<\/td>\n

\n

800,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

900,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

900,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/b><\/p>\n

Investment Account <\/span><\/b><\/p>\n\n\n\n\n\n\n\n
\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Amount<\/span><\/p>\n<\/td>\n

\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Amount<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

To Opening balance <\/span><\/p>\n<\/td>\n

\n

156,000<\/span><\/p>\n<\/td>\n

\n

By Bank (Sold, CSV, b\/f)<\/span><\/p>\n<\/td>\n

\n

102,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

To Profit and Loss (Profit)<\/span><\/p>\n<\/td>\n

\n

2,000<\/span><\/p>\n<\/td>\n

\n

By Closing balance <\/span><\/p>\n<\/td>\n

\n

56,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

To Bank (Purchase)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/p>\n<\/td>\n

\n

Nil <\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

158,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

158,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

Cash flow Statement<\/span><\/b><\/p>\n

Direct Method<\/span><\/i><\/p>\n\n\n\n\n\n\n\n\n\n\n
\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Amount<\/span><\/p>\n<\/td>\n

\n

Amount<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

CASH FROM INVESTING ACTIVITIES<\/span><\/b><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Cash inflow:<\/span><\/b><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Sales of fixed assets<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

60,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Sales of investment<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

102,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Cash outflow:<\/span><\/b><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Purchase of fixed assets \u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

(300,000)<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Net cash from investing activities (B)<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

(174,000)<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n

PROBLEM: 2D<\/span><\/b><\/p>\n

ABC Company Ltd has following extracted balance sheet and additional information:<\/span><\/p>\n\n\n\n\n\n\n\n
\n

Liabilities<\/span><\/p>\n<\/td>\n

\n

2020<\/span><\/p>\n<\/td>\n

\n

2021<\/span><\/p>\n<\/td>\n

\n

Assets <\/span><\/p>\n<\/td>\n

\n

2020<\/span><\/p>\n<\/td>\n

\n

2021<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Accumulated depreciation \u00a0<\/span><\/p>\n<\/td>\n

\n

12,000<\/span><\/p>\n<\/td>\n

\n

22,000<\/span><\/p>\n<\/td>\n

\n

Plant and machinery <\/span><\/p>\n<\/td>\n

\n

28,000<\/span><\/p>\n<\/td>\n

\n

40,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

Land and building <\/span><\/p>\n<\/td>\n

\n

18,000<\/span><\/p>\n<\/td>\n

\n

50,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

Investment <\/span><\/p>\n<\/td>\n

\n

10,000<\/span><\/p>\n<\/td>\n

\n

6,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Additional information: <\/span><\/p>\n

(a) Gain on sales of investment is $1,000<\/span><\/p>\n

(b) Loss on sales of plant (sales proceed $2,000) is $800<\/span><\/p>\n

[Answer: NCFIA = ($41,000) <\/span><\/i><\/p>\n

*Assets purchased = $48,000;<\/span><\/i><\/p>\n

SOLUTION <\/span><\/b><\/p>\n

Given and working note:<\/span><\/i><\/p>\n

Accumulated depreciation is NOT<\/span> mentioned either plant and machinery or land and building.<\/span><\/i><\/p>\n

It is combined for both; so, we will make combined ledger as fixed assets account.<\/span><\/i><\/p>\n

\u00a0<\/span><\/i><\/p>\n

Accumulated Depreciation on Plant Account <\/span><\/i><\/p>\n\n\n\n\n\n\n\n
\n

Particulars <\/span><\/i><\/p>\n<\/td>\n

\n

Amount<\/span><\/i><\/p>\n<\/td>\n

\n

Particulars <\/span><\/i><\/p>\n<\/td>\n

\n

Amount<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

To Depreciation (on sold, b\/f<\/span>)<\/span><\/i><\/p>\n<\/td>\n

\n

1,200<\/span><\/i><\/i><\/p>\n<\/td>\n

\n

By Opening balance <\/span><\/i><\/p>\n<\/td>\n

\n

12,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

To Closing balance <\/span><\/i><\/p>\n<\/td>\n

\n

22,000<\/span><\/i><\/p>\n<\/td>\n

\n

By P&L or IS<\/span><\/i><\/p>\n<\/td>\n

\n

11,200<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

(depreciation for the year 4,000 + 7,200)<\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

23,200<\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

23,200<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/i><\/p>\n

Fixed Assets Account (P&M and L&B) <\/span><\/i><\/p>\n\n\n\n\n\n\n\n\n
\n

Particulars <\/span><\/i><\/p>\n<\/td>\n

\n

Amount<\/span><\/i><\/p>\n<\/td>\n

\n

Particulars <\/span><\/i><\/p>\n<\/td>\n

\n

Amount<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

To Opening balance (28,000 + 18,000)<\/span><\/i><\/p>\n<\/td>\n

\n

46,000<\/span><\/i><\/p>\n<\/td>\n

\n

By Bank (sold, CSV, sales proceed) <\/span><\/i><\/p>\n<\/td>\n

\n

2,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

To P&L account (profit)<\/span><\/i><\/p>\n<\/td>\n

\n

Nil <\/span><\/i><\/p>\n<\/td>\n

\n

By Depreciation (on sold part)<\/span><\/i><\/p>\n<\/td>\n

\n

1,200<\/span><\/i><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

To Bank (purchase, b\/f<\/span>)<\/span><\/i><\/p>\n<\/td>\n

\n

48,000<\/span><\/i><\/i><\/p>\n<\/td>\n

\n

By P&L or IS\u00a0 (loss)<\/span><\/i><\/p>\n<\/td>\n

\n

800<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

By Closing balance\u00a0 (40,000 + 50,000)<\/span><\/i><\/p>\n<\/td>\n

\n

90,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

94,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/i><\/p>\n

Investment Account<\/span><\/i><\/p>\n\n\n\n\n\n\n
\n

Particulars <\/span><\/i><\/p>\n<\/td>\n

\n

Amount<\/span><\/i><\/p>\n<\/td>\n

\n

Particulars <\/span><\/i><\/p>\n<\/td>\n

\n

Amount<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

To Opening balance <\/span><\/i><\/p>\n<\/td>\n

\n

10,000<\/span><\/i><\/p>\n<\/td>\n

\n

By Bank (sales, b\/f<\/span>)<\/span><\/i><\/p>\n<\/td>\n

\n

5,000<\/span><\/i><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

To P&L (gain, profit)<\/span><\/i><\/p>\n<\/td>\n

\n

1,000<\/span><\/i><\/p>\n<\/td>\n

\n

By Closing balance\u00a0 <\/span><\/i><\/p>\n<\/td>\n

\n

6,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

11,000<\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

11,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/i><\/p>\n

Retained Earnings Account <\/span><\/i><\/p>\n\n\n\n\n\n\n
\n

Particulars <\/span><\/i><\/p>\n<\/td>\n

\n

Amount<\/span><\/i><\/p>\n<\/td>\n

\n

Particulars <\/span><\/i><\/p>\n<\/td>\n

\n

Amount<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

To Bank (dividend paid, b\/f<\/span>) <\/span><\/i><\/p>\n<\/td>\n

\n

3,000<\/span><\/i><\/b><\/i><\/b><\/p>\n<\/td>\n

\n

By Opening balance<\/span><\/i><\/p>\n<\/td>\n

\n

26,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

To Closing balance\u00a0 <\/span><\/i><\/p>\n<\/td>\n

\n

28,000<\/span><\/i><\/p>\n<\/td>\n

\n

By Income statement (NIAT)\u00a0 <\/span><\/i><\/p>\n<\/td>\n

\n

5,000<\/span><\/i><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

31,000<\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

31,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/i><\/p>\n

Cash flow Statement<\/span><\/b><\/p>\n

Direct Method<\/span><\/i><\/p>\n\n\n\n\n\n\n\n\n\n\n
\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Amount $<\/span><\/p>\n<\/td>\n

\n

Amount $<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Cash From Investing Activities<\/span><\/b><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Cash inflow:<\/span><\/b><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Sales of fixed assets<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

2,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Sales of investment<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

5,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Cash outflow:<\/span><\/b><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/b><\/p>\n<\/td>\n

\n

Purchase of fixed assets \u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

(48,000)<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Net cash from investing activities (B)<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

(41,000)<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/i><\/p>\n

\u00a0<\/span><\/i><\/p>\n

Click on the photo for FREE <\/span><\/b>e<\/span><\/b>Books<\/span><\/b><\/p>\n

\"\"<\/a><\/p>\n

\u00a0<\/p>\n

\u00a0<\/span><\/i><\/p>\n

\u00a0<\/span><\/p>\n

#####<\/span><\/p>\n\n\n\n
\n

PROBLEMS \u00a0\u00a0AND \u00a0\u00a0ANSWERS<\/span><\/b><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/b><\/p>\n

Here, Amount = Rs = $ = \u00a3 = \u20ac = <\/span>\u20b9<\/span> = Af = <\/span>\u09f3 <\/span>= Nu = Rf = <\/span>\u0dbb\u0dd4<\/span> = Br = P = Birr = Currency of your country<\/span>\u00a0 <\/span><\/p>\n

PROBLEM: 2A<\/span><\/b><\/p>\n

Following information is available related to plant and machinery:<\/span><\/p>\n

Opening balance on plant and machinery $600,000<\/span><\/p>\n

Closing balance of plant and machinery $900,000<\/span><\/p>\n

Depreciation on plant and machinery $100,000<\/span><\/p>\n

Required: Plant and machinery account <\/span><\/p>\n

[Answer: Purchased = $400,000] <\/span><\/i><\/p>\n

\u00a0<\/span><\/p>\n

Here, Amount = Rs = $ = \u00a3 = \u20ac = <\/span>\u20b9<\/span> = Af = <\/span>\u09f3 <\/span>= Nu = Rf = <\/span>\u0dbb\u0dd4<\/span> = Br = P = Birr = Currency of your country<\/span>\u00a0 <\/span><\/p>\n

PROBLEM: 2B\u00a0<\/span><\/b><\/p>\n

Following information is available:<\/span><\/p>\n\n\n\n\n\n
\n

Asset<\/span><\/p>\n<\/td>\n

\n

Year 2020<\/span><\/p>\n<\/td>\n

\n

Year 2021<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Vehicle<\/span><\/p>\n<\/td>\n

\n

16,00,000<\/span><\/p>\n<\/td>\n

\n

14,00,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Accumulated depreciation<\/span><\/p>\n<\/td>\n

\n

2,40,000<\/span><\/p>\n<\/td>\n

\n

3,60,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Additional information:<\/span><\/p>\n

A vehicle of $600,000 with accumulated depreciation $320,000 was sold for $200,000.<\/span><\/p>\n

Required: (a) Accumulated depreciation account; (b) Vehicle account <\/span><\/p>\n

[Answer: Depreciation for the year = $440,000; Purchased = $400,000]<\/span><\/i><\/p>\n

\u00a0<\/span><\/p>\n

Here, Amount = Rs = $ = \u00a3 = \u20ac = <\/span>\u20b9<\/span> = Af = <\/span>\u09f3 <\/span>= Nu = Rf = <\/span>\u0dbb\u0dd4<\/span> = Br = P = Birr = Currency of your country<\/span>\u00a0 <\/span><\/p>\n

PROBLEM: 2C<\/span><\/b><\/p>\n

Following information is available:<\/span><\/p>\n\n\n\n\n\n\n
\n

Details<\/span><\/p>\n<\/td>\n

\n

Year 2020<\/span><\/p>\n<\/td>\n

\n

Year 2021<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Plant and machinery<\/span><\/p>\n<\/td>\n

\n

500,000<\/span><\/p>\n<\/td>\n

\n

600,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Land and building<\/span><\/p>\n<\/td>\n

\n

200,000<\/span><\/p>\n<\/td>\n

\n

300,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Investment<\/span><\/p>\n<\/td>\n

\n

150,000<\/span><\/p>\n<\/td>\n

\n

90,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Additional information:<\/span><\/p>\n

Depreciation on fixed assets for the year is $90,000 and a part of machinery sold for $65,000.<\/span><\/p>\n

Investment is sold at profit of $4,000<\/span><\/p>\n

Required: (a) Fixed assets account; (b) Investment account <\/span><\/p>\n

[Answer: Fixed assets purchased = $355,000; <\/span><\/i><\/p>\n

Investment sold = $64,000]<\/span><\/i><\/p>\n

\u00a0<\/span><\/b><\/p>\n

Here, Amount = Rs = $ = \u00a3 = \u20ac = <\/span>\u20b9<\/span> = Af = <\/span>\u09f3 <\/span>= Nu = Rf = <\/span>\u0dbb\u0dd4<\/span> = Br = P = Birr = Currency of your country<\/span>\u00a0 <\/span><\/p>\n

PROBLEM: 2D<\/span><\/b><\/p>\n

Following extracted information is given to you:<\/span><\/p>\n\n\n\n\n\n\n\n
\n

Assets <\/span><\/p>\n<\/td>\n

\n

Year I<\/span><\/p>\n<\/td>\n

\n

Year II<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Machinery<\/span><\/p>\n<\/td>\n

\n

4,50,000<\/span><\/p>\n<\/td>\n

\n

6,00,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

8% Investment<\/span><\/p>\n<\/td>\n

\n

1,50,000<\/span><\/p>\n<\/td>\n

\n

2,50,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Land <\/span><\/p>\n<\/td>\n

\n

4,00,000<\/span><\/p>\n<\/td>\n

\n

2,50,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Furniture <\/span><\/p>\n<\/td>\n

\n

80,000<\/span><\/p>\n<\/td>\n

\n

30,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Additional information: <\/span><\/p>\n

(a) Depreciation charged $30,000 on machinery.<\/span><\/p>\n

(b) Land sold at a profit of $25,000 but furniture sold at a loss of $5,000.<\/span><\/p>\n

Required: Net cash from investing activities<\/span><\/p>\n

Answer: ($60,000)<\/span><\/i><\/p>\n

Here, Amount = Rs = $ = \u00a3 = \u20ac = <\/span>\u20b9<\/span> = Af = <\/span>\u09f3 <\/span>= Nu = Rf = <\/span>\u0dbb\u0dd4<\/span> = Br = P = Birr = Currency of your country<\/span>\u00a0 <\/span><\/p>\n

PROBLEM: 2E<\/span><\/b><\/p>\n

Following extracted information is given to you:<\/span><\/p>\n\n\n\n\n\n\n\n\n
\n

Assets <\/span><\/p>\n<\/td>\n

\n

Year I<\/span><\/p>\n<\/td>\n

\n

Year II<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Machinery<\/span><\/p>\n<\/td>\n

\n

5,00,000<\/span><\/p>\n<\/td>\n

\n

6,50,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Accumulated depreciation on machinery <\/span><\/p>\n<\/td>\n

\n

(50,000)<\/span><\/p>\n<\/td>\n

\n

(70,000)<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

8% Investment<\/span><\/p>\n<\/td>\n

\n

80,000<\/span><\/p>\n<\/td>\n

\n

60,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Land and building <\/span><\/p>\n<\/td>\n

\n

2,50,000<\/span><\/p>\n<\/td>\n

\n

4,50,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Furniture <\/span><\/p>\n<\/td>\n

\n

30,000<\/span><\/p>\n<\/td>\n

\n

15,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Additional information: <\/span><\/p>\n

a. A part of machinery costing $100,000 with accumulated of $15,000 was sold for $90,000.<\/span><\/p>\n

b. Investment sold at a profit of $5,000.<\/span><\/p>\n

c. Furniture sold at a loss of $4,000.<\/span><\/p>\n

Required: Net cash from investing activities<\/span><\/p>\n

Answer: ($324,000)<\/span><\/i><\/p>\n

\u00a0<\/span><\/b><\/p>\n

***** #EP<\/span>Online<\/span>Study *****<\/span><\/p>\n

Thank you for investing your time.<\/span><\/i><\/p>\n

Please comment on article.<\/span><\/i><\/p>\n

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Jay G<\/span>o<\/span>o<\/span>g<\/span>l<\/span>e<\/span>, Jay YouTube<\/span>, Jay Social Media<\/span><\/span><\/p>\n

\u091c\u092f \u0917\u0942<\/span>\u0917<\/span>\u0932<\/span>, <\/span>\u091c\u092f \u092f\u0941\u091f\u094d\u092f\u0941\u092c<\/span>, <\/span>\u091c\u092f \u0938\u094b\u0936\u0932 \u092e\u093f\u0921\u093f\u092f\u093e<\/span><\/span><\/p>\n

\u00a0<\/span><\/b><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

\u00a0 \u00a0 \u00a0 Preparation of Cash Flow Statement There are two methods to prepare cash flow statement; they are: (1) Direct method (2) Indirect method \u00a0 Both methods have three activities; they are: (a) Operating activities (b) Investing activities (c) Financing activities \u00a0 Keep in Mind (KIM) Only operating activities are difference between direct methods […]<\/p>\n","protected":false},"author":19997,"featured_media":4882,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2307,2308,958,2305,11],"tags":[1916,1920,2317,1921,1918,1917],"writers":[144],"yoast_head":"\nCash Flow Statement | Investing Activities | Fixed assets | Investment<\/title>\n<meta name=\"description\" content=\"Investing activities include sales of fixed asset, sales of investment, purchase of fixed assets and purchase of investment in CFS.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, 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