Plant and machinery (180000) is undervalued by 10%, how it will be treated in revaluation account and in balance sheet ( amount)
In revaluation account credit side
By Plant and Machinery 20000
Book Value = 180000
It is undervalued by 10% means if Actual valie is Rs. 100 then Book Value will be Rs. 90.
So actual value of Plant and Machinery will be 180000x100/90 = 200000
So its value will be increased by Rs. 20000( 200000 - 180000)
In Balance Sheet Asset Side.
Plant and Machinery 200000
By Plant and Machinery 20000
Book Value = 180000
It is undervalued by 10% means if Actual valie is Rs. 100 then Book Value will be Rs. 90.
So actual value of Plant and Machinery will be 180000x100/90 = 200000
So its value will be increased by Rs. 20000( 200000 - 180000)
In Balance Sheet Asset Side.
Plant and Machinery 200000