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If a machinery is purchased, how will it be treated while preparing the cash flow statement as per AS-3 (Revised)?

Solution

✅ Correct Option: 2

As per AS-3 (Revised), investing activities include the acquisition and disposal of long-term assets and other investments not included in cash equivalents. Purchase of machinery represents acquisition of a fixed asset and is classified as an investing activity. 'Purchasing activity' is not a recognised category.

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