One of the subsidiaries of B Ltd. submitted to Central Finance its Summarized Statement of Profit and Loss and Balance Sheet. Summarized Statement…

CA Final · Financial Reporting · MTP · November 2024
One of the subsidiaries of B Ltd. submitted to Central Finance its Summarized Statement of Profit and Loss and Balance Sheet. Summarized Statement of Profit and Loss for the year ended 31st March 20X3 Particulars Amount (₹) Net sales 2,52,00,000 Less: Cash cost of sales (1,92,00,000) Depreciation (6,00,000) Salaries & wages (24,00,000) Operating expenses (14,00,000) Provision for taxation (8,80,000) Net Operating Profit 7,20,000 Non-recurring income – profit on sale of equipment 1,20,000 8,40,000 Retained earnings and profit brought forward 15,18,000 23,58,000 Dividends declared and paid during the year (7,20,000) Profit & loss balance as on 31st March 20X3 16,38,000 Summarized Balance Sheet Assets 31 March 20X2 31 March 20X3 Non-current Assets Property, Plant and Equipment: Land 4,80,000 9,60,000 Buildings and Equipment 36,00,000 57,60,000 Current Assets Cash 6,00,000 7,20,000 Inventories 16,80,000 18,60,000 Trade Receivables 26,40,000 9,60,000 Advances 78,000 90,000 Total Assets 90,78,000 1,03,50,000 Liabilities & Equity Share capital 36,00,000 44,40,000 Surplus in profit & loss 15,18,000 16,38,000 Current liability Trade Payables 24,00,000 23,40,000 Outstanding expenses 2,40,000 4,80,000 Income tax payable 1,20,000 1,32,000 Accumulated depreciation on buildings and equipment 12,00,000 13,20,000 Total 90,78,000 1,03,50,000 The original cost of equipment sold during the year 20X2-20X3 was - 7,20,000. Work out a Statement of cash flows (as per indirect method) for the year ended 31st March 20X3.

Suggested Answer and Working Notes:

Statement of Cash Flows for the year ended 31st March 20X3 (Indirect method) Particulars Particulars ₹ Cash flow from operating activities: Net Profit before taxes and extraordinary items (7,20,000+8,80,000) 16,00,000 Add: Depreciation 6,00,000 Operating profit before working capital changes 22,00,000 Increase in inventories (1,80,000) Decrease in trade receivables 16,80,000 Advances (12,000) Decrease in trade payables (60,000) Increase in outstanding expenses 2,40,000 Cash generated from operations 38,68,000 Less: Income tax paid (Refer W.N.4) (8,68,000) Net cash from operations 30,00,000 Cash from investing activities: Purchase of land (4,80,000) Purchase of building & equipment (Refer W.N.2) (28,80,000) Sale of equipment (Refer W.N.3) 3,60,000 Net cash used for investment activities (30,00,000) Cash flows from financing activities: Issue of share capital 8,40,000 Dividends paid (7,20,000) Net cash from financing activities: 1,20,000 Net increase in cash and cash equivalents 1,20,000 Cash and cash equivalents at the beginning 6,00,000 Cash and cash equivalents at the end 7,20,000 Working Notes: 1. Building & Equipment Account Particulars ₹ Particulars ₹ To Balance b/d 36,00,000 By Sale of assets 7,20,000 To Cash/bank (purchases)(bal.fig) 28,80,000 By Balance c/d 57,60,000 64,80,000 64,80,000 2. Building & Equipment Accumulated Depreciation Account Particulars ₹ Particulars ₹ To Sale of asset (acc. depreciation) 4,80,000 By Balance b/d 12,00,000 To Balance c/d 13,20,000 By Profit & Loss A/c (provisional) 6,00,000 18,00,000 18,00,000 3. Computation of sale price of Equipment Particulars ₹ Original cost 7,20,000 Less Accumulated Depreciation (4,80,000) Net cost 2,40,000 Profit on sale of assets 1,20,000 Sale proceeds from sale of assets 3,60,000 4. Provision for tax Account Particulars ₹ Particulars ₹ To Bank A/c 8,68,000 By Balance b/d 1,20,000 To Balance c/d 1,32,000 By Profit & Loss A/c (provisional) 8,80,000 10,00,000 10,00,000

Topics: Ind AS 7

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