Calculation of Funds from Operating Activities a 59 Net Profit for the year Add: Depreciation on Fixed Assets Provision for Taxation (Closing balance) Goodwill written off (60,000 - 50,000) Less: Profit on sale of Fixed Assets Funds from Operating Activities before Tax Rs 80,000 30,000 60,000 10.000 1,80,000 5,000 1.75,000 Dr. Reserves Account Cr To Proposed Dividend 35,000 By Balance b/d 1,30,000 To Interim Dividend (balancing fig.) 10,000 By Net Profit 80,000 To Balance c/d 1,65,000 2,10,000 2,10,000 Illustration 18. The balance sheet of Hari Ltd. for 2009 and 2010 are given below: Balance Sheet Liabilities 2009 2010 Assets 2009 2010 Share Capital 6,00,000 8,00,000 Fixed Assets 16,00,000 19,00,000 Capital Reserve 20,000 Less: Depreciation 4,60,000 5,80,000 General Reserve 3,40,000 4,00,000 11,40,000 13,20,000 Profit & Loss A/C 1,20,000 1,50,000 Investment 2,00,000 1,60,000 Debentures 4,00,000 2,80,000 Current Assets 5,60,000 6,60,000 Current Liabilities 2,40,000 2,60,000 Preliminary Expenses 40,0000 20,000 Proposed Dividend 60,000 72,000 Provision for Tax 1,80,000 1,70,000 Unpaid dividends 19,40,000 21,60,000 19,40,000 21,60,000 Additional Information: During the year 2010, the Company: 1. Sold one machine for Rs. 50,000, the cost of which was Rs. 1,00,000 and the depreciation provided on it was Rs. 40,000: 2. Provided Rs. 1,80,000 as depreciation: 3. Sold some investment at a profit of Rs. 20,000, which was credited to Capital Reserve 4. Redeemed 30% of the Debentures @ 105; % @ 5. Decided to value stock at cost, whereas previously the practice was to value stock at cost less 10%. The stock according to books on 31-02-2009 was Rs 1,08,000. The stock on 31-12-2010 was correctly valued at Rs. 1,50,000; and 6. Decided to write of fixed assets costing Rs. 25,000 on which depreciation amounting to Rs. 20,000 has been provided. 8,000 Prepare cash flow statement using indirect method. Assume that investments are long-term investments and current assets in the beginning of and at the end of the year do not include cash and bank balance