On the date of admission of a partner there was a balance of ₹45,000 in the account of machinery. It is found undervalued by 10%. The value of machinery will appear in the new balance sheet at:
Answer & explanation
Correct answer: option 2
The correct answer is option 2- ₹50,000.
The machinery is undervalued by 10% means 90% value of machinery = ₹45,000.
In the new balance sheet 100% value is shown.
90% = 45,000
100% = 45,00 x 100/90
= ₹50,000