Question

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

• A. ₹67,500
• B. ₹82,500
• 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

Step 1: Understand undervaluation
Undervaluation means the machinery's value recorded is less than its actual value. Here, undervaluation is 10% of ₹75,000.
Step 2: Calculate undervaluation amount
Undervaluation = \(10\% \times 75,000 = \frac{10}{100} \times 75,000 = ₹7,500\).
Step 3: Calculate the new (corrected) value
New value = Original value - Undervaluation
= ₹75,000 - ₹7,500 = ₹67,500.