Q. Prepare the cash flow statement from investing activities of Alpha Creative Ltd for the
year ended March31, 2019
Refer attached data.
Also give reasons for the classification of above activities as inflow /outflow
Answers
Answer:
Cash Flow from Investing Activities is the section of a company’s cash flow statement that displays how much money has been used in (or generated from) making investments during a specific time period. Investing activities include purchases of long-term assets (such as property, plant, and equipment), acquisitions of other businesses, and investments in marketable securities (stocks and bonds).
Cash receipts: 45500 + 72500 = 118000.
Cash paid: 160000 + 595000 = (755000).
Net cash flow: 118000 - 755000 = (637000).
The answer is shown below
Explanation:
Investing activities: It tracks operations that include buying and selling long-term properties. The buying is a cash outflow whereas the sale is a cash inflow
The preparation of the cash flow statement from investing activities is presented below:
Cash flow from investing activities
Claim received for loss of plant in fire $45,500
Interest on loan received from subsidiary companies $72,500
Less: Plant acquired -$160,000
Less: Unsecured loan given to subsidiaries -$595,000
Net cash used by investing activities -$637,000
Since the claim is received plus the interest on loan is also received that reflect the inflow of cash with respect to the investing activities
Whereas the plant is purchased plus the unsecured loan is also given to subsidiaries that reflect the outflow of cash with respect to the investing activities
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Interest received on investment will be,
a) Added (Financing activities)
b) Deducted (Investing activities)
c) Added (Investing activities)
d) Deducted (Financing activities)
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