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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. 

1 Answer

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Calculation of Funds From Operations

Particulars Amount (Rs.)
Net Profit for the year (given) 65,00,000
Add: Non – fund items debited to P&L Account
Goodwill written off 1,80,000
Loss on sale of machinery 15,000
Transfer to General Reserve 12,50,000
Depreciation (20% of 65,00,000) 13,00,000 27,45,000
Less: Non – fund items credited to P&L Account
Profit on sale of building 3,55,000 3,55,000
Funds from operations 88,90,000

ADJUSTED PROFIT AND LOSS ACCOUNT

Particulars  Amount (Rs.) Particulars Amount (Rs.)
To Goodwill written off 1,80,000 By Profit on sale of building 3,55,000
To loss on sale of machinery 15,000 By Funds From Operations 88,90,000
To Transfer to General Reserve 12,50,000
To Depreciation (20% of 65,00,000) 13,00,000
To Net Profit  65,00,000
92,45,000 92,45,000

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