Study Material & Notes for the Chapter 12
CASH FLOW STATEMENT
IV. CASH FLOW FROM INVESTING ACTIVITIES
- As per AS-3, investing activities are the acquisition and disposal of long-term assets and other investments not included in cash equivalents
- Investing activities relate to purchase and sale of long-term assets or fixed assets which are not held for resale such as machinery, furniture, land and building, etc.
- Transactions related to long-term investment are also investing activities. It includes investments made in long term instruments with an objective to generate income in the form of interest, dividend & capital gain.
- Separate disclosure of cash flows from investing activities is important because they represent the extent to which expenditures have been made for resources intended to generate future income and cash flows.
- In the Balance Sheet, if the Investment is classified under Current Assets, it is to be taken as Cash Equivalent and not Long-term Investment.
Presentation in the Cash Flow Statement
|Proceeds from Sale of Fixed Assets|
|Proceeds from Sale of Investments (Other than Current Investments (to be included in Cash and Cash Equivalents) and Marketable Securities)|
|Proceeds from Sale of Intangible Assets|
|Interest and Dividend received (For Non-financial Companies only)|
|Payment for Purchase of Fixed Assets|
|Payment for Purchase of Investments (Other than Marketable Securities)|
|Payment for Purchase of Intangible Assets like Goodwill|
|Extraordinary Items (eg. Insurance Claim) (+/-)|
|Cash Flow from (or Used in) Investing Activities|