The net profit before taxes as per the profit and loss account, of Gaman Ltd is Rs 269244. With the given set of information, classify the given items as (operating / investing / financing), share the correct classification with logical reasoning
And calculate the cash flow from operating activities
Loss on sale of asset
95780
dividend income
26000
interest income
35000
finance cost paid on debentures
12000
gain on sale of investment
45000
Depreciation on fixed assets
85000
Amortisation Expenses
110000
Answers
Explanation:
loss on sale of assets operating
Given:
The net profit before taxes as per the profit and loss account, of Gaman Ltd is Rs269244. With the given set of information, classify the given items as operating investing/financing), share the correct classification with logical reasoning
To Find:
calculate the cash flow from operating activities TABLE given below :-
Loss on sale of asset 95780
dividend income 26000
interest income 35000
finance cost paid on debentures 12000
gain on sale of investment 45000
Depreciation on fixed assets 5000
Amortisation Expenses 110000
Solution:
The classification of items in operating / investing / financing are as follows,
Loss on sale of asset- Investing
dividend income- Investing
interest income- Investing
finance cost paid on debentures- Financing
gain on sale of investment- Investing
Depreciation on fixed assets- Investing
Amortisation Expenses- Investing
Now calculating the cash flow from the given activities,
Cash flow statement
In the books of Gaman Ltd
CASH FLOW FROM OPERATING ACTIVITIES
Net profit before taxes and extraordinary items 269244
adjustment for non cash items
Add: Amortisation expense 110000
Add: Depreciation on fixed assets 5000
adjustment for non operating items
Add: loss on sale of asset 95780
Less: dividend income 26000
Less: interest income 35000
Less: gain on sale of investment 45000
Add: finance cost paid on debentures 12000
Cash flow from operating activity 386024