1.

Calculate Funds from Operations from the following information: (i) Net profit for the year Rs. 65,00,000 (ii) Profit on sale of building Rs. 3,55,000 (iii) Goodwill appears in the books at Rs. 18,00,000 of which 10% has been written off during the year. (iv) Machinery worth Rs. 80,000 has been sold off Rs. 65,000 during the year. (v) Transfer to General Reserves Rs. 12,50,000. (vi) Depreciation at 20% has been provided on furniture of Rs. 65,00,000. 

Answer»

Calculation of Funds From Operations

ParticularsAmount (Rs.)
Net Profit for the year (given)65,00,000
Add: Non – fund items debited to P&L Account
Goodwill written off1,80,000
Loss on sale of machinery15,000
Transfer to General Reserve12,50,000
Depreciation (20% of 65,00,000)13,00,00027,45,000
Less: Non – fund items credited to P&L Account
Profit on sale of building3,55,0003,55,000
Funds from operations88,90,000

ADJUSTED PROFIT AND LOSS ACCOUNT

Particulars Amount (Rs.)ParticularsAmount (Rs.)
To Goodwill written off1,80,000By Profit on sale of building3,55,000
To loss on sale of machinery15,000By Funds From Operations88,90,000
To Transfer to General Reserve12,50,000
To Depreciation (20% of 65,00,000)13,00,000
To Net Profit 65,00,000
92,45,00092,45,000


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