CA Inter P1 · Chapter 2 · Question 4 of 12
Case: Pragati Tools Ltd (not a financial enterprise) had the following cash flows during the year: purchase of machinery ₹5,00,000; sale proceeds of long-term investments ₹1,80,000 (carrying amount ₹1,50,000); interest received on investments ₹40,000; dividend received ₹25,000. Net cash flow from investing activities under AS 3 is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Outflow of ₹2,55,000
Explanation
For a non-financial enterprise, interest and dividends received are classified as investing activities under AS 3. Investing cash flow = -5,00,000 + 1,80,000 + 40,000 + 25,000 = -2,55,000. The full sale proceeds (not the carrying amount) are the cash inflow.
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