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:

₹50,000

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