During the year ended 31 December 2019 Billy Limited paid £60,000 to acquire new plant and equipment to replace assets that had originally cost £45,000 but which now had a written down value of £15,000. The replaced assets were sold for £18,000, realising a profit on sale of £3,000. During the year, interest received was £1,000 and £5,000 of interest was paid. What is Billy Limited's net cash outflow from investing activities for the year ended 31 December 2019?

Question

Quizplus · Accepted Answer

The net cash outflow from investing activities is calculated as the cost of acquiring new plant and equipment (£60,000) minus the cash inflow from the sale of the replaced assets (£18,000), resulting in a net cash outflow of £42,000. However, the profit on sale is already included in the sale proceeds, so the correct net cash outflow is £60,000 - £18,000 = £42,000. The interest received and paid are not part of investing activities.

During the Year Ended 31 December 2019 Billy Limited Paid