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Cash Flow Statement 4.9
Additional Information:
1. Dividend on equity shares ` 50,000. The company paid preference dividend also.
2. Dividend received on shares held as an investment ` 15,000.
3. Interest received on ‘Government Bonds’ held as an investment ` 26,000.
4. A plot of land was purchased out of surplus funds for investment purposes and was
let out for commercial use and rent received ` 1,10,000.
5. All issues and redemption were made at the end of the year.

Solution: CASH FLOW FROM INVESTING ACTIVITIES AND FINANCING ACTIVITIES
Particulars `
(A) Cash Flow from Investing Activities
Sale of Patents 1,50,000
Interest received on Government Bonds 26,000
Dividend Received on Shares held as Investments 15,000
Rent received on Plot of Land 1,10,000 3,01,000
Goodwill Purchased (1,00,000)
Investment Purchased (1,50,000)
Machinery Purchased (1,85,000) (4,35,000)
Cash Used in Investing Activities (1,34,000)
(B) Cash Flow from Financing Activities
Issue of Share Capital (including premium) 5,50,000
Dividend Paid (50,000)
Preference Dividend Paid (16,000)
Redemption of Preference Shares (50,000)
Redemption of Debentures (1,00,000)
Interest on Debentures (Note) (22,000) 3,12,000
Cash Flow from Financing Activities 3,12,000
Note: It is presumed that the company must have paid Interest on Debentures as it cannot pay Preference
Dividend and Equity Dividend without payment of interest. Decrease in Patents is considered as Sales.
Illustration 7. Following is the extract from the Balance Sheet of Atlas Ltd.:
Particulars Note No. 31st March, 31st March,
2023 (`) 2024 (`)
I. EQUITY AND LIABILITIES
Shareholders’ Funds
Reserves and Surplus: Surplus, i.e., Balance in Statement of Profit & Loss 5,00,000 9,00,000
II. ASSETS
Goodwill 11,50,000 9,00,000
Patents 9,00,000 11,50,000
Land 2,50,000 10,50,000
Plant and Machinery 85,00,000 93,20,000
Less: Provision for Depreciation (42,50,000) (44,00,000)
10% Investment 10,50,000 2,50,000

Additional Information:
1. Investments costing ` 2,00,000 were purchased and some investments were sold at a
loss of 20% on 31st March, 2024.

2. Goodwill amortised was ` 5,00,000 and patents purchased was ` 5,00,000.