Read the following passage and answer the following question.
A, B & C are partners sharing profits and losses in the ratio of 2:2:1. B decided to retire on 31st March 2021. On the date of retirement, some of the assets and liabilities appeared in the books as follows-
Creditors- ₹70,000
Building- ₹1,00,000
Machinery- ₹40,000
Stock of raw material- ₹20,000
Stock of finished goods- ₹30,000
Debtors- ₹20,000
On the date of retirement, the building is to be appreciated by 20%. What will be the value of the building after appreciation?
Answer & explanation
Correct answer: option 3
The correct answer is option 3- ₹1,20,000.
Building = ₹1,00,000
Appreciation = 20%
So, appreciation = 1,00,000*20/100
= ₹20,000
So the current value = 1,00,000 + 20,000
= ₹1,20,000