# Question 20 Chapter 8 -Unimax Publication Class 12 Part 2 – 2021

Question no 20 Chapter no 8 unimax class12 part 2

Question 20 Chapter 8 – Unimax Publication Class 12 Part 2 – 2021

20.the balance in equipment account and accumulated depreciation account as on march 31,2021 and 2022 are given below:

 Balance as at March 31,2021 March 31,2022 Equipment 65,00,000 78,70,000 Accumulated depreciation 10,80,000 16,32,000

The equipment costing 12,30,000 accumulated depreciations thereon 7,18,000 was sold for 4,68,000.
Required:
(i) Compute the amount of equipment purchased, depreciation charged for the year and loss on sale of equipment.
(ii) How each of the item related to the equipment will be reported in statement of cash flow.

## The solution of Question 20 Chapter 8 – Unimax Publication Class 12 Part 2-2021 : –

Equipment Account

 Particulars ₹ Particulars ₹ To balance b/d 6,50,0000 By bank A/c (in flow) (sale) 4,68,000 To bank A/c (out flow) 2,60,0000 By accumulated depreciation A/c 7,18,000 (Balancing figure) (dep. on equipment sold) (Equipment purchased) By profit and A/c 44,000 (Loss and sale of equipment by balance c/d 78,70,000 91,00,000 91,00,000

Accumulated depreciation a/c

 Particulars ₹ Particulars ₹ To equipment A/c 7,18,000 By balance b/d 10,80,000 (dep. on equipment sold) To balance c/d 16,32,000 By profit and loss, A/c (B.F) 12,70,000 23,50,000 23,50,000

Amount of equipment purchased = 26,00,000
Treatment of items:
(a) Purchased of equipment 26,00,000 as cash used for investing activities
(b) 12,70,000 depreciations charged will be added to net profit for computing cash flow from operating activities.
(c) Loss on sale of equipment 44,000 will be added to net profit for competing cash flow from operating activities.
(d) Cash from sale of equipment 4,68,000 is used investing activities.

Comment if you have any Doubts.

What is the cash flow statement? why do we need to prepare?