Comprehension Passage
For each of the following transactions, calculate the resulting cash flow and state the nature of cash flow, viz., operating, investing and financing.
(a) Acquired machinery for Rs. 2,50,000 paying 20% by cheque and executing a bond for the balance payable.
(b) Paid Rs. 2,50,000 to acquire shares in Informa Tech. and received a dividend of Rs. 50,000 after the acquisition.
(c) Sold machinery of original cost Rs. 2,00,000 with an accumulated depreciation of Rs. 1,60,000 for Rs. 60,000.
What is the cash inflow and nature of the transaction (c)?
1
Rs. 2,00,000 – Financing activity
2
Rs. 40,000 – Operating activity
3
Rs. 60,000 – Investing activity
4
Rs. 2,00,000 – Investing activity