Cash Flows

Investing Activities

Investing activities includes all cash receipts and cash payments associated with purchasing or sale of non-current assets of the business. 

Sale of Assets 

Cash receipts from the sale of an asset. Do not include sale of assets for trade credits as these are not cash transactions. 

How to Find Cash Received on Sale of Assets?

Information can be found in the non-current assets section of the balance sheet. Sale of assets occur when there has been a decrease in the balance of non-current assets. 


In the above extract, plant and equipment has been sold as it's balance has decreased. The balance decreased from $70000 in 2015 to $35,000 in 2016, suggesting the asset was sold for $35,000.


Sale of assets only apply for non-current assets.

Double check in 'additional information' that the asset has not been sold for trade credit. 

Payment of Assets

Cash paid to accumulate assets. Only include the amount of cash paid for the asset in the financial year. For example, if an asset was paid in installments, only include the installments paid in the financial year.

How to Find Cash Payments for New Assets

Infomration can be found in the non-current assets section of the balance sheet. Payments of assets occur where the balance of non-current assets increased throughout the financial period.

In the above balance sheet extract, we can see the business purchased additional investments for $10,000 as it's balance increased from $50,000 to $60,000 and additional land was also purchased  for $20,000 as it's balance increased from $20,000 to $40,000.


Balances for non-current assets can also increase without a cash payment for assets. Reasons can include:

  • Upward revaluation of asset - usually occurs with land asset

  • Capital gain on investments - market price of investment rises

These will be indicated in additional information, otherwise, assume a purchase in cash has been made.

Purchase of New Asset, Sale of Old Asset Adjustment

Identifying cash paid for new assets and cash received from sale of old assets is easy as you only have to identify differences in balanes of assets. Questions in the ATAR course will mostly focus on purchases of new assets where an old asset has been sold as these are more difficult. Students must use balance day adjustment techniques to find the amount of cash paid for the new asset and cash received for old asset. 

View the video below for a tutorial on sale of asset adjustments. 

Reconstruction of Sale of Asset | Cash Flows Tutorial
Download the Question in the Video