Question

P and Q are partners in a firm. They admitted R for `1/4`th share in profits. The book value of machinery as on the date of admission was ₹ 7,00,000. There was an unrecorded machine of ₹ 40,000, which was brought into the books, and a damaged machine of book value of ₹ 25,000 is to be written off. 20% is to be reduced from the value of the machine. The revalued amount of the machine will be ______.

Options

• ₹ 5,73,500

• ₹ 5,76,000

• ₹ 5,75,000

• ₹ 5,72,000

Answer 1

P and Q are partners in a firm. They admitted R for `1/4`th share in profits. The book value of machinery as on the date of admission was ₹ 7,00,000. There was an unrecorded machine of ₹ 40,000, which was brought into the books, and a damaged machine of book value of ₹ 25,000 is to be written off. 20% is to be reduced from the value of the machine. The revalued amount of the machine will be ₹ 5,72,000.

Explanation:

Adjusted Book Value of Machinery = 7,00,000 + 40,000 − 25,000

= 7,15,000

20% is to be reduced from the value of the machine. This 20% reduction is applied to the adjusted book value

Reduction Amount = `7,15,000 xx 20/100`

= 1,43,000

Revalued Amount = Adjusted Book Value − Reduction Amount

= 7,15,000 − 1,43,000

= 5,72,000