Question : The Patents of X Ltd. increased from Rs.6,00,000 in 2013-14 to Rs.7,00,000 in 2014-15. what will be its treatment while preparing Cash Flow Statement for the year ended 31st March 2015?
Option 1: Purchase of Patents of Rs.50,000 and will be shown under Cash Flow from Investing Activities as an outflow of cash.
Option 2: Purchase of Patents of Rs.1,00,000 and will be shown under Cash Flow from Investing Activities as an outflow of cash.
Option 3: Purchase of Patents of Rs.1,50,000 and will be shown under Cash Flow from Investing Activities as an outflow of cash.
Option 4: None of the above
Correct Answer: Purchase of Patents of Rs.1,00,000 and will be shown under Cash Flow from Investing Activities as an outflow of cash.
Solution : Answer = Purchase of Patents of Rs.1,00,000 and will be shown under Cash Flow from Investing Activities as an outflow of cash.
The increase in patents from Rs. 6,00,000 to Rs. 7,00,000 indicates an investment in intangible assets. When preparing the Cash Flow Statement, the purchase of patents for Rs. 1,00,000 will be shown under Cash Flow from Investing Activities as an outflow of cash, reflecting the investment in intangible assets. Hence, the correct option is 2.
Question : Where will you show purchase of intangible assets in a Cash Flow Statement?
Option 1: Shown as outflow under 'Cash flows from investing activities'.
Option 2: Shown as outflow under 'Cash flows from operating activities'.
Option 3: Shown as inflow under 'Cash flows from investing activities'.
Question : Payment of dividend in a Cash flow statement is
Option 1: Payment of dividend will be shown as outflow under 'Cash flows from financing activities'.
Option 2: Payment of dividend will be shown as inflow under 'Cash flows from financing activities'.
Option 3: Payment of dividend will be shown as outflow under 'Cash flows from investing activities'.
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