Question

A machinery worth ₹75,000 was undervalued by 10%. What will be its new value in the Balance Sheet?

• A. ₹82,500
• B. ₹67,500
• C. ₹75,000
• D. ₹70,000

Hint:

To find the corrected value after undervaluation, subtract the percentage undervaluation from the original value.

Answer 1

The Correct Option is A

To solve the problem, we need to find the new value of the machinery after accounting for the 10% undervaluation.

1. Understanding the undervaluation:
The machinery is originally worth ₹75,000 but was undervalued by 10%, which means the recorded value is 10% less than the actual worth.

2. Calculating the undervaluation amount:
Undervaluation amount = 10% of ₹75,000
= \( \frac{10}{100} \times 75,000 = ₹7,500 \)

3. Calculating the new value in the Balance Sheet:
Since the machinery was undervalued by ₹7,500, the correct value should be:
New value = Original value + Undervaluation amount
= ₹75,000 + ₹7,500 = ₹82,500

Final Answer:
The new value of the machinery in the Balance Sheet will be ₹82,500.