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Question
Joy and Deb were partners sharing profits and losses in the ratio of 2 : 1. They admitted Gopi into the partnership for a `1/5` share. At the time of Gopi’s admission, Furniture (book value ₹ 2,50,000) was reduced by 40%, and Machinery (book value ₹ 1,50,000) was reduced to 40%.
What was the net decrease in value of assets?
Numerical
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Solution
Book value of Furniture = ₹ 2,50,000
Reduction in Furniture value = `2,50,000 xx 40/100`
= ₹ 1,00,000
Book value of Machinery = ₹ 1,50,000
Reduced to 40% of book value, meaning a decrease of 100% − 40%
= 60%
Reduction in Machinery value = `1,50,000 × 60/100`
= ₹ 90,000
Net decrease = Reduction in Furniture + Reduction in Machinery
Net decrease = ₹ 1,00,000 + ₹ 90,000
= ₹ 1,90,000
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