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EXAMPLE

Given below are the balance sheets as on March 31, previous year and current year and a statement of income and reconciliation of earnings for the current year of Electronics lid (EL). The only intern the buildings and equipment account sold during the year was a specialized machine that originally cost. Rs 15,000. The accumulated depreciation on this machine at the time of sale was Rs 8,000. The machine was sold for Rs 6,000 and full payment was received in cash. Electronics Ltd purchased patents for Rs.16,000 during the year. Besides cash purchases of plant and equipment, the assets of another company were also purchased for R, 1.00,000 payable in fully paid-up shares, issued at par, the assets purchased being goodwill, Rs 30,000 and equipment, Rs 70,000.

Comparative Balance Sheets

Comparative Balance Sheets

Comparative Balance Sheets

From the foregoing information, prepare a funds-flow statement for Electronics Ltd.

Solution

Funds Flow Statement of Electronics Limited for the Current Year

Funds Flow Statement of Electronics Limited for the Current Year

Determination of depreciation charged (x) during current year:
Opening balance of AD, Rs 1,05.000 + x – AD written off on the machine sold during the current years Rs 8.000 = Rs 1.20.000 closing balance or x = Rs 1.20.000 – Rs 97.000 = Rs 23,000

Alternately the amount 01 cash purchases can be corrupted by Equation 6.2. (Rs 4.20.000 opening balance + Rs 70,000 purchase through equity share capital + x Rs 15,000. acquisition cost of plant sold closing Rs 4.75,000 = Rs 75,000).

Determination of cash operating expenses
Total operating expenses
Less: Depreciation
Less: Amortization of Intents.

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