fund flow

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CA Vijeta Verma (Querist)
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02 December 2009 dear sir/ma'am
my ques relates to fund flow statement,its regarding the treatment
of TRADE INVESTMENTS
in the que following info. are given:
op bal of trade investment=Rs105000
cl bal of trade investment=Rs40000
as per income statement gain on sale of investment=R6400
is there any treatment of these adjustment to be done in ADJUSTED P& L A/C, FUND FLOW STATEMENT??

thanks
vijeta verma
pcc student

CA. SUDHARSAN K G

CA. SUDHARSAN K G (Expert)
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02 December 2009 Vijeta Verma

Try to understand the following:

Opening Balance of Trade Investment Rs. 1,05,000/-
Closing Balance of Trade Investment Rs. 40,000/-
Gain on Sale of Investment Rs. 6, 400/-

In Fund Flow Statement,
Sources of Funds:
Sale of Investments Rs. 71,400/-

In Adjusted P&L A/c:
By Profit on Sale Rs. 6,400/-

The Ultimate logic behind this is,
You received the funds on account of Rs. 1,51,400/- So, it is shown as above.
In the same way, you should know how much you earned from the operations, hence you should add to the adjusted P&L A/c as follows.

To Depreciation XXX By Balance b/d XXX
To Loss on Sale XXX By Profit on Sale 6400
To Bal c/d XXX By Adj P&L (Bal) XXX

Hope, you understand it logiclly.

Anjani Pratap Tiwari

Anjani Pratap Tiwari (Expert)
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03 December 2009 Your Opening Balance is 105000
Closing is 40000
Profit on sale is 6400
That means Sales amount of Investement is (105000-40000+6400)=71400/-

So your Inflow from sale of investment is 71400/- i.e. source of Funds