Question
Download Solution PDFWhen net profit is Rs 44,000 and profit on sale of a fixed asset is Rs 4,000, what is the fund from operations?
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFNet Profit: Net profit is the difference in total revenues and total expenses and losses which include both operating and non-operating items.
Funds From Operation: Funds from operation excludes both non-operating incomes and non-operating losses/expenses.
Non-operating income refers to the part of a company’s income that is not attributable to its core business operations. It is a category in a multi-step income statement. Dividend incomes, gains or losses from foreign exchange, as well as sales of assets, a write-down of assets, interest incomes, and expenses are all examples of non-operating income items.
Formula:
Fund from operation = Net Profit - Non-operating income(sale of the fixed asset)
= Rs. 44,000 - Rs. 4,000
= Rs. 40,000
Therefore, When net profit is Rs. 44,000 and profit on the sale of a fixed asset is Rs. 4,000, the fund from operations will be Rs. 40,000.
Last updated on Jun 6, 2025
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