rtgh

1st Puc Accountancy Chapter 7 Depreciation, Provisions And Reserves Notes | ಪ್ರಥಮ ಪಿಯುಸಿ ಲೆಕ್ಕಶಾಸ್ತ್ರ ಅಧ್ಯಾಯ – 7 ನೋಟ್ಸ್

1st Puc Accountancy Chapter 7 Depreciation, Provisions And Reserves Notes Question And Answer Pdf Download Mcq Depreciation, Provisions And Reserves Class 11 Solutions Chapter 7 Accounts Class 11 Practical Problems Accounts Class 11 Chapter 7 Pdf Class 11 Accounts Chapter 7 Double Entry System Notes ಪ್ರಥಮ ಪಿಯುಸಿ ಲೆಕ್ಕಶಾಸ್ತ್ರ ಅಧ್ಯಾಯ – 7 ನೋಟ್ಸ್

 

1st Puc Accountancy Chapter 7 Notes

1st Puc Accountancy Chapter 7 Depreciation, Provisions And Reserves Notes | ಪ್ರಥಮ ಪಿಯುಸಿ ಲೆಕ್ಕಶಾಸ್ತ್ರ ಅಧ್ಯಾಯ - 7 ನೋಟ್ಸ್
1st Puc Accountancy Chapter 7 Depreciation, Provisions And Reserves Notes

Karnataka 1st PUC Accountancy Chapter 7 Depreciation, Provisions and Reserves

One and Two Marks Qs

Q1. State any two features of Depreciation.

  1. It is simple and easy to calculate.
  2. It can reduce the book value of the asset to zero.

Q2. State any two causes of depreciation.

  1. Wear and tear and
  2. Passage of time.

Q3. State any two reasons for charging depeciation

  1. To show correct profit/loss position.
  2. To show the asset at the correct market value.

Q4. Mention any two factors affecting the amount of annual depreciation.

  1. cost of the asset and
  2. Scrap value

Q5. State the two methods of depreciation.

  1. Straight line method
  2. Diminishing value method

Q6. What is the straight line method of depreciation?

Under this method, a fixed percentage of the original cost is written off every year, as annual depreciation.

Q7. What is the written down value method of depreciation?

Under this method, depreciation at fixed percentage is calculated on the
reduced balance of the asset brought forward from the previous year”

Q8. What is annuity method

Under this method not only the reduced cost of the asset is charged as depreciation also the interest it would have carried in case the cost of the asset is invested outside. The depreciation will be as per annuity table.

Q9. Give the meaning of depreciation fund method.

Under this system, the amount written off as depreciation should be kept aside and invested in readily saleable securities. When the life of the asset expires, the securities are sold and a new asset is purchased with the help of sale proceeds.

Q10. What do you mean by insurance policy method?

Under this method, an insurance policy is taken for the required sum for replacing the asset to be written off.

Q 11. What is revaluation method?

Under this method, the market value of the asset is ascertained at the end of
each year. Any difference between the book value and market value is the depreciation.

Q12 What is Provision?

Provision is a charge against profit to meet epi own liabilities or contingencies.

Q13. What is Reserve?

Reserve is an appropriation of profit retained to meet unknown liabilities or contingencies.

Q14. state any two types of reserves

  1. Capital reseve and
  2. Revenue reserve.

Q15. State any two types of revenue reserves.

  1. General reserves
  2. Specific reserves

Q16. What is Capital reserve?

Capital reserve is created out of Capital profits which is used for writing off capital losses or issue of bonus shares.

Q17. What is Revenue reserve?

Revenue reserve is created out of the revenue profits which arise out of the normal operating activities of the business.

Q18. What is General reserve?

When the purpose for which a reserve is created jegpecie it is called a General reserve.

Q19. What is Specific reserve?

Specific reserve is the reserve which is created for some specific purpose and
can be utilised only for that perpose.

Q20. Give two examples for Capital reserve.

  1. profit on sale of fixed assets and
  2. profit on issue of shares or debentures.

Q21. Give two examples for Revenue reserve.

  1. General reserve and
  2. Investment fluctuation reserve.

Q22. What is Depreciation?

Decrease in the value of fixed assets due to their regular use or expiry of time is termed as depreciation.

1st Puc Accountancy Chapter 7 Notes

Six Marks Qs

Q1. State briefly the need for providing depreciation.

Depreciation is needed for following reasons:

1. Determining actual profit or loss: Actual profit and loss can be determined only when all expenditures and losses are added to P & L Account. Assets in business are used to earn revenues; the corresponding cost gets charged as depreciation in P & L Account (Profit & Loss Account).

2. Provide unbiased view of financial statements: Assets will be shown at inflated values when depreciation do not get charged, so it will lead to balance sheet not showing the fair view of the financial statements.

3. Cost of production: Production cost includes the depreciation charged on machinery and plant and other similar assets. When depreciation is not charged production cost will be uneven which will reduce the profit.

4. Distribution of dividend from profit: If no depreciation is charged then overestimation of profit takes place which causes profit to be distributed as dividend. It results in movement of capital away from the business.

5. Funds used for asset replacement: Depreciation charged for assets will help in meeting the expense for replacing the asset in future.

6. Tax consideration: The P & L account will reflect less profit if depreciation is charged, which results in paying less taxes for the business.

Q2. Explain basic factors affecting the amount of depreciation

The basic factors affecting the amount of depreciation are as follows:

1. Cost of asset: Depreciation of an asset is directly proportional to the cost of asset and cost of a fixed asset is calculated by adding cost of acquisition, installation etc. Hence, cost is an important factor for affecting depreciation.

2. Estimated useful life: Every fixed asset has a useful life till which it can be used for a business. After that it will not be of any use to the business. Hence, useful life of an asset is also a factor to determine depreciation.

3. Estimated scrap value: Every asset has a scrap value or salvage value. It is also known as net residual value or as the sale value of the asset arrived at the end of its useful life. If the net residual value is more, it will help in reducing the amount of depreciation and vice versa. Thus, net residual value is also one of the factors affecting the amount of depreciation.

Q3. What are the causes of depreciation?

The major causes of depreciation are listed below:

1. Regular use: Regular use of assets leads to decrement that reduces the value of such assets.

  1. Expiry with time: Assets whether used or not, will show a decline in their effective life with the passage of time. Rain, wind and other Natural forces bring about deterioration of the asset.
  2. Obsolescence: Technological advances will make the current assets obsolete in future

2. Legal rights expiry: An assets value becomes zero after its useful life. This is known as depreciation in accounting terms.

  1. Accident: The value of an asset can be permanently reduced due to some accident which can include fire, natural calamity etc.

Q4. Distinguish between straight line method and written down value method of calculating depreciation.

The points of difference between straight line method and written down value method is as follows:

Basis of ComparisonStraight Line MethodWritten Down Value Method
How it is calculatedOriginal asset cost is taken as the basis for calculating DepreciationReducing balance is the basis of calculating depreciation. Reducing balance is also known as book value
How depreciation is chargedA fixed amount is deducted every year till the useful life of the assetDepreciation is deducted based on the written down value of an asset every year, till the effective life of an asset.
Value of AssetIt reaches zero at the effective life of the asset and is written offIt never becomes zero and hence not completely written off.
Asset SuitabilityAssets such as buildings and lands which require less repair and have less chances of becoming obsolete are suitable for this methodAssets requiring more repair like, machinery ,plant, car are more suitable
Impact of Depreciation and repairs on P & L accountIncreases every yearRemains constant every year

Q5. In case of a long-term asset, repair and maintenance expenses are expected to rise in later years than in earlier year. Which method is suitable for charging depreciation if the management does not want to increase burden on profits and loss account on account of depreciation and repair?

In case of assets that require more repairs in the later part of their life such as car, machinery etc., the most preferred method that can be used by management for maintaining a balance on profit and loss account is the written down method.

In this method, in the initial years, depreciation costs are high and repairs are less, while at the later years the situation is reversed and the repair cost increases with lower depreciation costs. This creates a balance without putting burden on profit.

Q6. What are the effects of depreciation on profit and loss account and balance sheet?

Following effects can be seen in P & L account:

1. Reduces net profit by increasing the debit column of P & L account.

2. Surplus of debit balance occurs over the credit balance due to increase in the total expenses.

Impact on balance sheet:

1. It leads to reduction of book value or original cost of the asset.

2. It leads to decrease in total balance of the asset’s column.

 Q7 Distinguish between provision and reserve

Basis of ComparisonProvisionReserve
MeaningMaintained to meet a liability that is known in natureCreated to meet any liability that is unknown in nature
NatureIt is charged against profitAppropriation of profit is reserve
PurposeFormed with a specific liability in mindCreated for fortifying the business
How it is createdBy debiting P& L accountBy debiting the P & L appropriation account.
Dividend PaymentNot used for paying dividendsCan be utilized for paying dividends
Need of CreationIt needs to be created if business makes no profit at allIt is created if profit is there in business

Q8. Give four examples each of provision and reserves.

Examples of provision:

  1. Provision for taxation
  2. Provision for discount on debtors
  3. Provision for bad and doubtful debts
  4. Provision for depreciation

Examples of reserves:

  1. Dividend equalisation reserve
  2. Debenture redemption reserve
  3. General reserve
  4. Capital reserve

Q9. Distinguish between revenue reserve and capital reserve.

Basis of ComparisonRevenue ReserveCapital Reserve
Source of creationRevenue received from daily operations of a business.Profits earned from sale of capital assets.
For paying DividendYes, can be paid as dividendNo, cannot be paid as dividend
PurposeIt helps serving the purpose of solidification of the businesses financial positionServes the purpose of financing long term project or writing off capital expenses

Q10. Give four examples each of revenue reserve and capital reserves.

Revenue reserve examples are as follows:

  1. General Reserve
  2. Retained Earnings
  3. Dividend Equalisation Reserve
  4. Debenture Redemption Reserve

Capital reserve examples are as follows:

  1. Sale of fixed assets
  2. Issues of shares at premium
  3. Profit or issue of shares
  4. Profit on redemption of debentures

Q11. Distinguish between general reserve and specific reserve.

Basis of ComparisonGeneral ReserveSpecific Reserve
MeaningA reserve created without any specific purposeReserve created with a specific purpose
UsesCan be utilized on whichever purpose necessary for businessIt needs to be used only for the purpose it is created
Some examplesFund reserves, retained earningsDividend equalisation reserve, Debenture redemption reserve, etc.

Twelve Marks Qs

 Q1 Discuss in detail the straight-line method and written down value method of depreciation. Distinguish between the two and also give situations where they are useful.

Straight Line method

It is one of the simplest method of calculating depreciation. It is charged on original cost of the asset at a constant rate.

Depreciation is calculated using the formulae:

Annual Depreciation expense = (Asset cost – Residual Value) / Useful life of the asset

Advantages of Straight-Line Method

  1. Simple calculation required
  2. Value of an asset can be made zero after its useful life.
  3. Comparing P & L accounts every year is easy as equal amount is charged as depreciation.
  4. It is suitable for assets which require less repairs.

Straight-Line Method limitations

  1. More burden on P & L account as asset becomes older and requires repair and maintenance.
  2. An asset can become zero value even when it is in useful condition.

Straight-Line Method benefits

  1. Useful for assets which require less repairs and maintenance.
  2. Useful if an asset is used continuously.

Written Down Value Method

Rate of depreciation is calculated on the diminishing value of asset. It is also known as reducing balance method.

Rate of depreciation is calculated using the formulae:

Rate of Depreciation

Where,

R = depreciation rate

n = Assets useful life that can be expected

s = scrap value

c= cost of an asset

Written Down Value Method Advantages

  1. Depreciation is charged more in initial years as asset will be more useful during the early years.
  2. As assets will be requiring more repair in the later stages. The collective load of depreciation and repairs on profit and loss account will remain equal over the years.
  3. Approved for tax calculations
  4. Loss arising from obsolescence can be greatly reduced as most of the cost is recovered in the initial years.

Written Down Value Method Limitations

  1. Determining the rate of depreciation is difficult.
  2. The book value never reaches zero in this method as depreciation cannot be fully written off.
  3. Business may find it difficult to gather price for replacement of asset as most of the depreciation is charged in the early years and that amount is used in the business.

Written Down Value Method Uses

  1. Suitable for assets having long useful life.
  2. Convenient for assets that requiring greater maintenance costs and repairs in the later years.

Difference between Straight Line Method and Written Down Value Method

Basis of ComparisonStraight Line MethodWritten Down Value Method
How it is calculatedActual cost of an asset is taken as the basis for calculating DepreciationReducing balance is the basis of calculating depreciation. Reducing balance is also known as book value
How depreciation is chargedFixed amount is charged every year till the effective life of the assetDepreciation is charged based on the written down value of asset every year, till the effective life of the asset
Value of AssetIt becomes zero at the end of effective life of the asset and is written offIt never becomes zero and hence not completely written off.
Asset SuitabilityAssets such as buildings and lands which require less repair and have less chances of becoming obsolete are suitable for this methodAssets requiring frequent repair like, machinery, plant and car.
Impact of Depreciation and repairs on P & L accountIncreases every yearRemains constant every year

Q2.Explain the concept of depreciation. What is the need for charging depreciation and what are the causes of depreciation?

Any fixed asset that is acquired by a business is subjected to wear and tear and obsolescence over a time. This decrease in monetary value is calculated by a measure in accounting called as depreciation.

Depreciation is needed for following reasons:

1. Determining actual profit or loss: Actual profit and loss can be determined only when all losses and expenses are added to P & L Account. Assets are used in business to earn revenues, the cost is charged as depreciation in P & L Account (Profit & Loss Account).

2. Provide fair view of financial statements: Assets will be shown at inflated values as charge for depreciation is not added, so it will lead to balance sheet not showing the fair view of the financial statements.

3. Cost of production: Cost of production includes the depreciation charged on plant, machinery and other similar assets. If depreciation is not charged cost of production will be uneven which will reduce the profit.

4. Distribution of dividend from profit: If no depreciation is charged then overestimation of profit takes place which leads to profit being circulated as dividend. It leads to the movement of capital away from the business.

5. Funds used for replacement of assets: Depreciation charged for assets will help in meeting the expense for replacing of asset in future.

6. Tax consideration: The P & L account will reflect less profit if depreciation is charged, which results in paying less taxes for the business.

The major causes of depreciation are listed below:

1. Regular use: Regular use of assets leads to its deterioration that reduces the value of such assets.

  1. Expiry with time: Assets whether used or not, will show a decline in their effective life with the passage of time. Rain, wind and other Natural forces bring about deterioration of the asset.
  2. Obsolescence: Technological advances will make the current assets obsolete in future

2. Legal rights Expiry: The value of an asset becomes zero after its useful life. This is known as depreciation in accounting terms.

  1. Accident: The value of an asset can be permanently reduced due to some accident which can include fire, natural calamity etc.

Q3.Explain determinants of the amount of depreciation.

The basic factors affecting the amount of depreciation are as follows:

1. Cost of asset: Depreciation of an asset is directly proportional to the cost of asset and cost of a fixed asset is calculated by adding cost of acquisition, installation etc. Hence, cost is an important factor for affecting depreciation.

2. Estimated useful life: Every fixed asset has a useful life till which it can be used for a business. After that it will not be of any use to the business. Hence, useful life of an asset is also a factor to determine depreciation.

3. Estimated scrap value: Every asset has a scrap value or salvage value. It is also known as net residual value or sale value of the asset at the end of its useful life. If the net residual value is more, it will help in reducing the amount of depreciation and vice versa. Thus, net residual value is also one of the factors affecting the amount of depreciation.

After 10 years, furniture is sold at ₹ 5,000. So, depreciation will be:

Depreciation (p.a.) = (Original cost – Scrap Value)

Estimated Life of Asset (years)

= (40,000 – 5,000)

10

= 3,500/annum

Q4.Describe in detail two methods of recording depreciation. Also give the necessary journal entries.

Here are some methods by which depreciation can be recorded:

  1. Depreciation charged to asset account: In this method, the depreciation is deducted from the depreciable cost of the asset which gets credited to asset account and debited to profit and loss account.

Journal entries for depreciation are shown below:

Depreciation charged to asset account

Depreciation A/c Dr.
To Assets A/c
(Depreciation charged to Assets Account)

Closing of Depreciation Account

Profit and Loss A/c Dr.

To Depreciation A/c

(Depreciation transferred to P& L Account)

  1. Provision created for depreciation account− In this method amount of depreciation is debited to depreciation account and credited to provision for depreciation account. The depreciation amount gets transferred to P & L account at the end of the year.

Following journal entries are made:

Charging (crediting) Depreciation to Provision for depreciation account

Depreciation A/c Dr.
To Provision for Depreciation A/c
(Charged Depreciation)

For charging depreciation to P & L account

Profit and Loss A/c Dr.
To Depreciation A/c
(Depreciation charged to Profit and Loss Account)

After sale of asset, the accumulated depreciation gets credited to the Asset account with the following entry:

Provision for Depreciation A/c Dr.
To Asset A/c
(Accumulated depreciation gets debited to Assets Account)

Q5. What are provisions? How are they created? Give accounting treatment in case of provision for doubtful Debts.

The actual amount of expenses or losses for the current accounting period cannot be determined with certainty as they have not been incurred yet. Net profit of the business can only be arrived after making a provision for such expenses or losses. A few examples of provisions are mentioned below:

  1. Provision for depreciation
  2. Provision for taxation
  3. Provision for bad and doubtful debts
  4. Provision for discount on debtors

Provisions are created by debiting the Profit and Loss Account on estimate basis. It is created on the basis of past experiences. A business may experience common losses, such as depreciation of fixed assets, taxation, etc. every year, which although are known; but, their exact amount in future period is unknown.

Therefore, a business always creates a provision based on certain percentage every year, which is purely based on the intuition and past experiences. These undetermined liabilities in form of provisions are kept aside, which will help future business activities, undisturbed from the future losses.

Accounting treatment for provision for doubtful debts is:

Profit and Loss A/c Dr.
To Provision for Doubtful Debts
(Provision for doubtful debts made)

Q6.Name and explain different types of reserves in details.

Reserves: Reserves are created from the profits of the business. It helps in fortifying the financial position of a business and also help in growth of company.

Reserves are classified into two types:

  1. Revenue Reserve: Revenue reserve is created from revenue profit. It can be of two types: a) General and b) Specific Purpose

a. General Reserve: The purpose for which reserves are created are not specified, such reserves are called as General Reserves. These reserves can be utilized for the growth of business.

b. Specific Reserve: A specific reserve is created with the intent of utilizing for a specific purpose in the business.

Following are some examples:

i. Dividend Equalisation Reserve

ii. Debenture Redemption Reserve

  1. Capital Reserve: Reserve which is created out of capital profit such as sale of some fixed asset is known as capital reserve. Here are some examples of capital reserves:

i. Premium on issue of debentures

ii. Premium on issue of shares

iii. Profit on sale of fixed assets

iv. Profit prior to incorporation

v. Profit on redemption of debentures

3. Secret Reserves− An amount that leads to undervaluing the assets of an organization or overestimation of liabilities is called as secret reserve. It is created with the purpose of hiding business profit from competitive organizations or competitors.

Q7. On April 01, 2010, Bajrang Marbles purchased a Machine for ₹ 1, 80,000 and spent ₹ 10,000 on its carriage and ₹ 10,000 on its installation. It is estimated that its working life is 10 years and after 10 years its scrap value will be ₹ 20,000.

(a) Prepare Machine account and Depreciation account for the first four years by providing depreciation on straight line method. Accounts are closed on March 31st every year.

(b) Prepare Machine account, Depreciation account and Provision for depreciation account (or accumulated depreciation account) for the first four years by providing depreciation using straight line method accounts are closed on March 31 every year.

Machine account and Depreciation account using depreciation on straight line method is as follows:

Books of Bajrang Marbles

(a) Machinery Account

Dr Cr

DateParticularsJ.F.AmountDateParticularsJ.F.Amount
20102011
Apr.01Bank2,00,000Mar.31Depreciation18,000
Balance c/d1,82,000
2,00,0002,00,000
20112012
Apr.01Balance b/d1,82,000Mar.31Depreciation18,000
Mar.31Balance c/d1,64,000
1,82,0001,82,000
20122013
Apr.01Balance b/d1,64,000Mar.31Depreciation18,000
Mar.31Balance c/d1,46,000
1,64,0001,64,000
20132014
Apr.01Balance b/d1,46,000Mar.31Depreciation18,000
Mar.31Balance c/d1,28,000
1,46,0001,46,000

Hence, the closing balance of machinery account after 4 years is ₹. 1, 28,000.

Working notes: Calculation of annual depreciation

Cost of Asset= 1, 80,000 + 10,000 +10,000= 2, 00,000

Depreciation (p.a.) = (Original cost – Scrap Value )

Estimated Life of Asset (years)

= (1,80,000 + 10,000 + 10,000 – 20,000)

10

= ₹ 18,000/annum

The depreciation account is calculated as:

Depreciation Account

Dr Cr

DateParticularsJ.F.AmountDateParticularsJ.F.Amount
20112011
Mar.31Machinery18,000Mar.31Profit and Loss18,000
18,00018,000
20122012
Mar.31Machinery18,000Mar.31Profit and Loss18,000
18,00018,000
20132013
Mar.31Machinery18,000Mar.31Profit and Loss18,000
18,00018,000
20142014
Mar.31Machinery18,000Mar.31Profit and Loss18,000
18,00018,000

(b) Machinery Account

Dr Cr

DateParticularsJ.F.Amount DateParticularsJ.F.Amount
20102011
Apr.01Bank2,00,000Mar.31Balance c/d2,00,000
2,00,0002,00,000
20112012
Apr.01Balance b/d2,00,000Mar.31Balance c/d2,00,000
2,00,0002,00,000
20122013
Apr.01Balance b/d2,00,000Mar.31Balance c/d2,00,000
2,00,0002,00,000
20132014
Apr.01Balance b/d2,00,000Mar.31Balance c/d2,00,000
2,00,0002,00,000

Provision for Depreciation Account

Dr Cr

DateParticularsJ.F.AmountDateParticularsJ.F.Amount
20112011
Mar.31Balance c/d18,000Mar.31Depreciation18,000
18,00018,000
2011
Apr.01Balance b/d18,000
 20122012
 Mar.31Balance c/d 18,000Mar.31Depreciation18,000
36,00036,000
2012
Apr.01Balance b/d36,000
 20132013
 Mar.31Balance c/d 54,000Mar.31Depreciation18,000
54,00054,000
2003
Apr.01Balance b/d54,000
 20142014
 Mar.31Balance c/d 72,000Mar.31Depreciation18,000
72,00072,000

Hence, the provision for Depreciation account at the end of 4th Year is ₹.72, 000

Depreciation Account

Dr Cr

DateParticularsJ.F.AmountDateParticularsJ.F.Amount
20112011
Mar.31Provision for Depreciation18,000Mar.31Profit and Loss18,000
18,00018,000
20122012
Mar.31Provision for Depreciation18,000Mar.31Profit and Loss18,000
18,00018,000
20132013
Mar.31Provision for Depreciation18,000Mar.31Profit and Loss18,000
18,00018,000
20142014
Mar.31Provision for Depreciation18,000Mar.31Profit and Loss18,000
18,00018,000

Q8 On July 01, 2010, Ashok Ltd. Purchased a Machine for ₹ 1, 08,000 and spent ₹ 12,000 on its installation. At the time of purchase it was estimated that the effective commercial life of the machine will be 12 years and after 12 years its salvage value will be ₹ 12,000.

Prepare machine account and depreciation Account in the books of Ashok Ltd. For first three years, if depreciation is written off according to straight line method. The account are closed on December 31st, every year.

The machine account and depreciation account are as follows:

Cost of Machine = ₹. (1, 08,000 + 12,000)

= ₹ 1,20,000

Books of Ashok Ltd.

Machinery Account

Dr Cr

DateParticularsJ.F.AmountDateParticularsJ.F.Amount
20102010
Jul.01Bank1,20,000Dec.31Depreciation4,500
Dec.31Balance c/d1,15,500
1,20,0001,20,000
20112011
Jan.01Balance b/d1,15,500Dec.31Depreciation9,000
Dec.31Balance c/d1,06,500
1,15,0001,15,500
20122012
Jan.01Balance b/d1,06,500Dec.31Depreciation9,000
Dec.31Balance c/d97,500
1,06,5001,06,500
2013
Jan.01Balance b/d97,500

Hence, the closing balance after three years is ₹ 97,500.

Working notes: Calculation of annual depreciation

Depreciation (p.a.) = (Original cost – Scrap Value )

Estimated Life of Asset (years)

= (1,08,000 + 12,000 – 12,000)

12

= ₹ 9,000

Depreciation Account

Dr Cr

DateParticularsJ.F.AmountDateParticularsJ.F.Amount
20102010
Dec.31Machinery4,500Dec.31Profit and Loss4,500
4,5004,500
20112011
Dec.31Machinery9,000Dec.31Profit and Loss9,000
9,0009,000
20122012
Dec.31Machinery9,000Dec.31Profit and Loss9,000
9,0009,000

Q9. Reliance Ltd. purchased a second hand machine for ₹ 56,000 on October 01, 2011 and spent ₹ 28,000 on its overhaul and installation before putting it to operation. It is expected that the machine can be sold for ₹ 6,000 at the end of its useful life of 15 years. Moreover an estimated cost of ₹ 1,000 is expected to be incurred to recover the salvage value of ₹ 6,000. Prepare machine account and Provision for depreciation account for the first three years charging depreciation by fixed Instalment Method. Accounts are closed on March 31, every year.

Machine account and provision for depreciation account are as follows:

Books of Reliance Ltd.

Machinery Account

Dr Cr

DateParticularsJ.F.AmountDateParticularsJ.F.Amount
20112011
Oct.01Bank84,000
Dec.31Balance c/d84,000
84,00084,000
20122012
Jan.01Balance b/d84,000
Dec.31Balance c/d84,000
84,00084,000
20132013
Jan.01Balance b/d84,000
Dec.31Balance c/d84,000
84,00084,000

Dr Cr

Provision for Depreciation  Account

DateParticularsJ.F.AmountDateParticularsJ.F.Amount
2011
Dec.31Depreciation1,316
2011
Dec.31Balance c/d1,316
1,3161,316
2012
Jan.01Balance b/d1,316
2012Dec.31Depreciation5,267
Dec.31Balance c/d6,583
6,5836,583
2013
Jan.01Balance b/d6,583
2013Dec.31Depreciation5,267
Dec.31Balance c/d11,850
11,85011,850
2014
Jan.01Balance b/d11,850

As per the solution the balance of provision for depreciation account is ₹. 11,850

Working Note:

Calculation of annual depreciation

Depreciation = (Original cost – Scrap Value )

Estimated Life of Asset (years)

= (56,000 + 28,000 – 6,000 + 1,000)

15 years

= ₹ 5,267

1st puc accountancy 7th lesson question answer

Q10. Berlia Ltd. Purchased a second hand machine for ₹ 56,000 on July 01, 2015 and spent ₹ 24,000 on its repair and installation and ₹ 5,000 for its carriage. On September 01, 2016, it purchased another machine for ₹ 2, 50,000 and spent ₹ 10,000 on its installation.

(a) Depreciation is provided on machinery @10% p.a on original cost method annually on December 31. Prepare machinery account and depreciation account from the year 2015 to 2018.

(b) Prepare machinery account and depreciation account from the year 2015 to 2018, if depreciation is provided on machinery @10% p.a. on written down value method annually on December 31.

The machinery account and depreciation account are as follows:

Books of Berlia Ltd.

(a) Machinery Account (Using Original Cost Method)

Dr Cr

DateParticularsJ.F.AmountDateParticularsJ.F.Amount
20152015
Jul.01Bank (i)85,000Dec.31Depreciation4,250
(5,600 + 24,000 + 5,000)Dec.31Balance c/d80,750
85,00085,000
20162016
Jan.01Balance b/d (i)80,750Dec.31Depreciation
Sep.01Bank (ii)2,60,000(i) 8,500, (ii) 8,66717,167
(2,50,000 + 10,000)Dec.31Balance c/d3,23,583
(i) 72,250, (ii) 2,51,333
3,40,7503,40,750
20172017
Jan.01Balance b/d3,23,583Dec.31Depreciation
(i) 72,250, (ii) 2,51,333(i) 8,500, (ii) 26,00034,500
Dec.31Balance c/d
(i) 63,750, (ii) 2,25,3332,89,083
3,23,5833,23,583
2018Balance b/d2018
Jan.01(i) 63,750, (ii) 2,25,3332,89,083Dec.31Depreciation
(i) 8,500, (ii) 26,00034,500
Dec.31Balance c/d
(i) 55,250, (ii) 1,99,3332,54,583
2,89,0832,89,083

Hence, balance on machine account as on 1st Jan 2019 is ₹. 2, 54,583

Depreciation Account

Dr Cr

DateParticularsJ.F.AmountDateParticularsJ.F.Amount
20152015
Dec.31Machinery4,250Dec.31Profit and Loss4,250
4,2504,250
20162016
Dec.31MachineryDec.31Profit and Loss17,167
(i) 8,500 (ii) 8,66717,167
17,16717,167
20172017
Dec.31MachineryDec.31Profit and Loss34,500
(i) 8,500 (ii) 26,00034,500
34,50034,500
20182018
Dec.31Machinery34,500Dec.31Profit and Loss34,500
(i) 8,500 (ii) 26,00034,50034,500

Working notes: Calculation of depreciation per annum

(i) Depreciation on Machinery Purchased on July 01, 2015

= (56,000 + 24,000 + 5,000) × 10

100

= ₹ 8,500 pa

(ii) Depreciation on Machinery purchased on September 01, 2016.

= (2,50,000 + 10,000) × 10

100

= ₹ 26,000 pa

(b) Machinery Account (Written Down Value method)

Dr Cr

DateParticularsJ.F.Amount DateParticularsJ.F.Amount 
20152015
Jul.01Bank (i)85,000Dec.31Depreciation4,250
(5,600 + 24,000 + 5,000)Dec.31Balance c/d80,750
85,00085,000
20162016
Jan.01Balance b/d (i)80,750Dec.31Depreciation
Sep.01Bank (ii)2,60,000(i) 8,075, (ii) 8,66716,742
(2,50,000 + 10,000)Dec.31Balance c/d
(i) 72,675, (ii) 2,51,333 3,24,008
3,40,7503,40,750
20172017
Jan.01Balance b/d3,24,008Dec.31Depreciation
(i) 72,675, (ii) 2,51,333(i) 7,268, (ii) 25,13332,401
Dec.31Balance c/d
(i) 65,407, (ii) 2,26,2002,91,607
3,24,0083,24,008
2018Balance b/d2018
Jan.01(i) 65,407, (ii) 2,26,2002,91,607Dec.31Depreciation
(i) 6,540, (ii) 22,62029,160
Dec.31Balance c/d
(i) 58,867, (ii) 2,03,5802,62,447
2,91,6072,91,607

Hence, balance on machine account as on 1st Jan 2019 is ₹ 2, 62,447

Depreciation Account

Dr Cr

DateParticularsJ.F.AmountDateParticularsJ.F.Amount ₹
20152015
Dec.31Machinery4,250Dec.31Profit and Loss4,250
4,2504,250
20162016
Dec.31MachineryDec.31Profit and Loss16,742
(i) 8,075, (ii) 8,66716,742
16,74216,742
20172017
Dec.31MachineryDec.31Profit and Loss32,401
(i) 7,268, (ii) 25,13332,401
32,40132,401
20182018
Dec.31MachineryDec.31Profit and Loss29,160
(i) 6,540, (ii) 22,62029,160
29,16029,160

Q11. Ganga Ltd. purchased a machinery on January 01, 2014 for ₹ 5, 50,000 and spent ₹ 50,000 on its installation. On September 01, 2014 it purchased another machine for ₹ 3, 70,000. On May 01, 2016 it purchased another machine for ₹ 8, 40,000 (including installation expenses).

Depreciation was provided on machinery @10% p.a. on original cost method annually on December 31. Prepare:

(a) Machinery account and depreciation account for the years 2014, 2015, 2016 and 2017.

(b) If depreciation is accumulated in provision for Depreciation account then prepare machine account and provision for depreciation account for the years 2014, 2015, 2016 and 2017.

The machinery account and depreciation account are as follows:

Books of Ganga Ltd.

(a) Machinery Account

Dr Cr

DateParticularsJ.F.AmountDateParticularsJ.F.Amount
20142014
Jan.01Bank (i)6,00,000Dec.31Depreciation(i) 60,000 (ii) 12,33372,333
(5,50,000 + 50,000)Dec.31Balance c/d
Sep.01Bank (ii)3,70,000(i) 5,40,000, (ii) 3,57,6678,97,667
9,70,0009,70,000
20152015
Jan.01Balance b/dDec.31Depreciation
(i) 5,40,000, (ii) 3,57,6678,97,667(i) 60,000, (ii) 37,000,
May.01Bank (iii)8,40,000(iii) 56,0001,53,000
Dec.31Balance c/d
(i) 4,80,000 (ii) 3,20,667,
(iii) 7,84,00015,84,667
17,37,66717,37,667
20162016
Jan.01Balance b/dDec.31Depreciation
(i) 4,80,000, (ii) 3,20,667(i) 60,000, (ii) 37,000,
(iii) 7,84,00015,84,667Dec.31(iii) 84,0001,81,000
Balance c/d
(i) 4,20,000, (ii) 2,83,667,
(iii) 7,00,00014,03,667
15,84,66715,84,667
20172017
Jan.01Balance b/dDec.31Depreciation
(i) 4,20,000, (ii) 2,83,667,(i) 60,000, (ii) 37,000,
(iii) 7,00,00014,03,667(iii) 84,0001,81,000
Dec.31Balance c/d
(i) 3,60,000, (ii) 2,46,667,
(iii) 6,16,00012,22,667
14,03,66714,03,667

The balance of machine account is ₹.12, 22,667.

Depreciation Account

Dr Cr

DateParticularsJ.F.Amount ₹DateParticularsJ.F.Amount ₹
20142014
Dec.31Machinery72,333Dec.31Profit and Loss72,333
72,33372,333
20152015
Dec.31Machinery1,53,000Dec.31Profit and Loss1,53,000
1,53,0001,53,000
20162016
Dec.31Machinery1,81,000Dec.31Profit and Loss1,81,000
1,81,0001,81,000
20172017
Dec.31Machinery1,81,000Dec.31Profit and Loss1,81,000
1,81,0001,81,000

(b) Machinery Account 

Dr Cr

DateParticularsJ.F.AmountDateParticularsJ.F.Amount
20142014
Jan.01Bank (i)6,00,000
(5,50,000 + 50,000)Dec.31Balance c/d
Sep.01Bank (ii)3,70,0009,70,000
9,70,0009,70,000
20152015
Jan.01Balance b/d
(i) 6,00,000 (ii) 3,70,0009,70,000
May.01Bank (iii)8,40,000Dec.31Balance c/d18,10,000
18,10,00018,10,000
20162016
Jan.01Balance b/dDec.31Balance c/d18,10,000
(i) 6,00,000 (ii) 3,70,000
(iii) 8,40,00018,10,000
18,10,00018,10,000
20172017
Jan.01Balance b/dDec.31Balance c/d18,10,000
(i) 6,00,000 (ii) 3,70,000
(iii) 8,40,00018,10,000
18,10,00018,10,000

Provision for Depreciation  Account

Dr Cr

DateParticularsJ
F.
Amount ₹DateParticularsJ
F.
Amount 
20142014
Dec.31Balance c/d72,333Dec.31Depreciation72,333
72,33372,333
2015
2015Jan.01Balance b/d72,333
Dec.31Balance c/d2,25,333Dec.31Depreciation1,53,000
2,25,3332,25,333
2016
2016Jan.01Balance b/d2,25,333
Dec.31Balance c/d4,06,333Dec.31Depreciation1,81,000
4,06,3334,06,333
2017
2017Jan.01Balance b/d4,06,333
Dec.31Balance c/d5,87,333Dec.31Depreciation1,81,000
5,87,3335,87,333

The provision for depreciation account has a balance of ₹. 5, 87,333

Q12. Azad Ltd. purchased furniture on October 01, 2014 for ₹ 4, 50,000. On March 01, 2015 it purchased another furniture for ₹ 3, 00,000. On July 01, 2016 it sold off the first furniture purchased in 2014 for ₹ 2, 25,000. Depreciation is provided at 15% p.a. on written down value method each year. Accounts are closed each year on March 31. Prepare furniture account, and accumulated depreciation account for the years ended on March 31, 2015, March 31, 2016 and March 31, 2017. Also give the above two accounts if furniture disposal account is opened.

The furniture account and accumulated depreciation account are as follows:

Books of Azad Ltd

Furniture Account

Dr Cr

DateParticularsJ.F.Amount ₹DateParticularsJ.F.Amount 
20142015
Oct.01Bank (i)4,50,000
2015Mar.31Balance c/d7,50,000
Mar.01Bank (ii)3,00,000
7,50,0007,50,000
20152016
Apr.01Balance b/d
(i) 4,50,000, (ii) 3,00,0007,50,000Mar.31Balance c/d7,50,000
7,50,0007,50,000
20162016
Apr.01Balance b/d7,50,000July 01Furniture Disposal4,50,000
(i) 4,50,000, (ii) 3,50,0002005
Mar.31Balance c/d3,00,000
7,50,0007,50,000

Accumulated Depreciation Account

Dr Cr

DateParticularsJ.F.Amount DateParticularsJ
F.
Amount ₹
20152015
Mar.31Balance c/d37,500Mar.31Depreciation
(i) 33,750, (ii) 3,75037,500
37,50037,500
20162015
Mar.31Balance c/d1,44,376Apr.01Balance b/d37,500
2016
Mar.31Depreciation
(i) 62,438, (ii) 44,3781,06,876
1,44,3761,44,376
20162016
July.01Furniture Disposal1,09,456Apr.01Balance b/d1,44,376
2017July.01Depreciation (i)13,268
Mar.31Balance c/d85,9602017
Mar.31Depreciation (ii)37,772
1,95,4161,95,416

Hence, the balance of provision of depreciation account is ₹. 85,960.

Furniture Disposal Account

Dr Cr

DateParticularsJ.F.Amount ₹DateParticularsJ.F.Amount 
20162016
Jul.01Furniture4,50,000Jul.01Accumulated Dep.1,09,456
Jul.01Bank2,25,000
Jul.01Profit and Loss (Loss)1,15,544
4,50,0004,50,000

Working Note:

Furniture (i)

YearsOpening BalanceDepreciationClosing Balance
2014 – 20154,50,00033,750= 4,16,250
2015 – 20164,16,25062,438= 3,53,812
20163,53,81213,268(3 months)= 3,40,544
1,09,456
Balance on July 01, 20163,40,544
Less: Sale on July 01, 2016(2,25,000)
Loss on sale of furniture1,15,544

So, we see that Loss on sale of furniture is ₹ 1, 15,544.

 Q13 M/s Lokesh Fabrics purchased a Textile Machine on April 01, 2011 for ₹ 1,00,000. On July 01, 2012 another machine costing ₹ 2, 50,000 was purchased. The machine purchased on April 01, 2011 was sold for ₹ 25,000 on October 01, 2015. The company charges depreciation @15% p.a. on straight line method. Prepare machinery account and machinery disposal account for the year ended March 31, 2016.

Machinery account and Machinery disposal account are prepared below:

Books of M/s. Lokesh Fabrics

Machinery Account

Dr Cr

DateParticularsJ.F.AmountDateParticularsJ.F.Amount
20112012
Apr.01Bank (i)1,00,000Mar.31Depreciation15,000
Mar.31Balance c/d85,000
1,00,0001,00,000
20122013
Apr.01Balance b/d85,000Mar.31Depreciation
July.01Bank (ii)2,50,000(i) 15,000 + 28,12543,125
Mar.31Balance c/d
(i) 70,000, (ii) 2,21,8752,91,875
3,35,0003,35,000
20132014
Apr.01Balance b/dMar.31Depreciation
 (i) 70,000, (ii) 2,21,8752,91,875(i) 15,000, (ii) 37,50052,500
Mar.31Balance c/d
(i) 55,000, (ii) 1,84,3752,39,375
2,91,8752,91,875
20142015
Apr.01Balance b/dMar.31Depreciation
(i) 5,500, (ii) 1,84,3752,39,375(i) 15,000, (ii) 37,50052,500
Mar.31Balance c/d
(i) 40,000, (ii) 1,46,8751,86,875
2,39,3752,39,375
20152015
Apr.01Balance b/dOct.01Depreciation7,500
(i) 40,000, (ii) 1,46,8751,86,875Oct.01Machinery Disposal32,500
2016
Mar.31Depreciation (ii)37,500
Mar.31Balance c/d1,09,375
1,86,8751,86,875

Hence, the balance of machine account is ₹.1, 09,375

Machinery Disposal Account

Dr Cr

DateParticularsJ.F.AmountDateParticularsJ.F.Amount ₹
20152015
Oct.01Machinery32,500Oct.01Bank25,000
Oct.01Profit and Loss7,500
32,50032,500

Here we see that Loss on sale of machine account is ₹. 7,500.

Q14. The following information is extracted from the Trial Balance of M/s Nisha Traders on 31 March 2017.

Sundry Debtors80,500
Bad Debts1,000
Provision for Bad Debts5,000

Additional Information:

Bad Debts ₹ 500

Provision is to be maintained at 2% of Debtors

Prepare bad debts account, Provision for bad debts account and profit and loss account.

The bad debts account, Provision for bad debts account and profit and loss account are shown below:

Bad Debt Account

Dr Cr

Dr.Cr.
DateParticularsJ.F.AmountDateParticularsJ.F.Amount
20172017
Mar.31Balance b/d1,000Mar.31Provision for Bad Debts1,500
Mar.31Debtors500
1,5001,500

Provision for Bad debt Account

Dr Cr

DateParticularsJ.F.AmountDateParticularsJ.F.Amount
20172017
Mar.31Bad Debt1,500Mar.31Balance b/d5,000
Mar.31Profit and Loss1,900
Mar.31Balance c/d (2% of 80,500-500)1,600
5,0005,000

Profit and Loss Account

Dr Cr

DateParticularsJ.F.AmountDateParticularsJ.F.Amount 
2017
 Mar.31Provision for Bad Debts1,900

Hence, the new provision is ₹. 1600 and the profit and loss account shows as a credit of ₹.1900.

Q15. An extract of Trial balance from the books of Tahiliani and Sons Enterprises on March 31, 2017 is given below:

Name of the AccountDebit AmountCredit Amount
   
Sundry debtors50,000 
Bad debts6,000 
Provision for doubtful debts 4,000

Additional Information:

  • Bad Debts proved bad; however, not recorded amounted to ₹ 2,000.
  •  Provision is to be maintained at 8% of debtors

Give necessary accounting entries for writing off the bad debts and creating the provision for doubtful debts account. Also, show the necessary accounts.

The solution is given below:

DateParticularsL.FDebit Amount ₹Credit Amount ₹
Bad Debt A/c Dr.
To Debtors A/c
(Further bad debt charged from Debtors Account)
2,000



2,000

Provision for Doubtful Debt A/c Dr.
To Bad Debt A/c
(Amount of bad debt transferred to Provision for Doubtful Debt Account)






8,000










8,000


Profit and Loss A/c Dr.
To Provision for Doubtful Debt A/c
(Amount of Provision for Doubtful Debt transferred to Profit and Loss Account)
7,8407,840

Bad Debt Account

Dr Cr

DateParticularsJ.F.Amount DateParticularsJ.F.Amount ₹
20172017
Mar.31Balance b/d6,000Mar.31Provision for Doubtful
Mar.31Debtors2,000Debt 8,000
8,0008,000

Debtors Account

Dr Cr

DateParticularsJ.F.Amount DateParticularsJ.F.Amount ₹
20172017
Mar.31Balance b/d50,000Mar.31Bad Debt2,000
Mar.31Balance c/d48,000
50,00050,000

Provision for Doubtful Debts Account

Dr Cr

DateParticularsJ.F.Amount DateParticularsJ.F.Amount ₹
20172017
31 Mar.Bad Debt (6,000 + 2,000)8,000Apr.01Balance b/d4,000
31 Mar.Balance c/d (8% of 50,000-2,000)3,840Mar.31Profit and Loss7,840
11,84011,840

Hence, the new provision for bad debts is ₹, 3,840 and profit and loss account balance is ₹7840.

Q16. A Plant was purchased on 1st July, 2015 at a cost of ₹ 3, 00,000 and ₹ 50,000 were spent on its installation. The depreciation is written off at 15% p.a. on the straight line method. The plant was sold for ₹ 1, 50,000 on October 01, 2017 and on the same date a new Plant was installed at the cost of ₹ 4, 00,000 including purchasing value. The accounts are closed on December 31 every year.

Show the machinery account and provision for depreciation account for 3 years

Machinery account and provision for depreciation account is shown below:

Plant Account

Dr Cr

DateParticularsJ.F.AmountDateParticularsJ.F.Amount
20152015
July.01Bank3,50,000Dec.31Balance c/d3,50,000
3,50,0003,50,000
20162016
Jan.01Balance b/d3,50,000
Dec.31Balance c/d3,50,000
3,50,0003,50,000
20172017
Jan.01Balance b/d3,50,000Oct.01Provision for Depreciation1,18,125
Oct.01Bank4,00,000Oct.01Bank1,50,000
Oct.01Profit and Loss81,875
Dec.31Balance c/d4,00,000
7,50,0007,50,000

Provision for Depreciation Account

Dr Cr

DateParticularsJ.F.AmountDateParticularsJ.F.Amount
20152015
Dec.31Balance c/d26,250Dec.31Depreciation26,250
26,25026,250
20162016
Dec.31Balance b/d78,750Jan.01Balance c/d26,250
Dec.31Depreciation52,500
78,75078,750
20172017
Oct.01Plant1,18,125Jan.01Balance b/d78,750
 Dec.31Balance c/d15,000Oct.01Depreciation (i) (9 months)39,375
Dec.31Depreciation (ii) (3 months)15,000
1,33,1251,33,125

Hence, the loss on sale of plant is ₹ 81,875 and the balance of machine account is ₹

4,00,000.

Q17. On January 01, 2014, a Limited Company purchased machinery for ₹ 20, 00,000. Depreciation is provided @15% p.a. on diminishing balance method. On March 01, 2016, one fourth of machinery was damaged by fire and ₹ 40,000 were received from the insurance company in full settlement. On September 01, 2016 another machinery was purchased by the company for ₹ 15, 00,000.

Write up the machinery account from 2016 to 2017. Books are closed on December 31, every year.

The machinery account is prepared as follows:

Machinery Account

Dr Cr

DateParticularsJ.F.AmountDateParticularsJ
F.
Amount
20162016
Jan.01Balance b/d (i)(10,83,750 + 3,61,250)14,45,000Mar.01Depreciation (1/4 Machine for 2 Months)9,031
Sep.01Bank (ii)15,00,000Mar.01Bank40,000
Mar.01Profit and Loss3,12,219
Dec.31Depreciation (i)
(i) 1,62,563 (3/4th of  machine),(ii) 75,0002,37,563
Dec.31Balance c/d
(i) 9,21,187, (ii) 14,25,00023,46,187
29,45,00029,45,000
20172017
Jan.01Balance b/dDec.31Depreciation
(i) 9,21,187, (ii) 14,25,00023,46,187Dec.31(i) 1,38,177, (ii) 2,13,7503,51,927
Balance c/d
(i) 7,83,009, (ii) 12,11,25019,94,260
23,46,18723,46,187

Working Note:

Machine (i)

YearsJanuary 01Depreciation(15% p.a.)=Closing Balance
201420,00,0003,00,000=17,00,000
201517,00,0002,55,000=14,45,000
201614,45,000

1/4th of Machine that was damaged (i)

YearsOpening BalanceDepreciation(15% p.a.)=Closing Balance
20145,00,00075,000=4,25,000
20154,25,00063,750=3,61,250
20163,61,2509,031 (2 months)=3,52,219
Value on 1 Mar. 2016=3,52,219
Insurance Claim=40,000
Loss₹ 3,12,219

Hence, the loss on one-fourth of 1st machine is ₹ 3,12,219 and the balance for machine account is ₹19,94,260.

Q18. On January 01, 2011, Satkar Transport Ltd, purchased 3 buses for ₹ 10, 00,000 each. On July 01, 2013, one bus was involved in an accident and was completely destroyed and ₹ 7, 00,000 were received from the Insurance Company in full settlement. Depreciation is written off @15% p.a. on diminishing balance method. Prepare bus account from 2011 to 2014. Books are closed on December 31 every year.

The bus account is prepared below:

Books of Satkar Transport Ltd.Bus Account

Dr Cr

DateParticularsJ.F.Amount DateParticularsJ.F.Amount 
20112011
Jan.01Bank30,00,000Dec.31Depreciation4,50,000
Dec.31Balance c/d25,50,000
30,00,00030,00,000
20122012
Jan.01Balance b/d25,50,000Dec.31Depreciation3,82,500
Dec.31Balance c/d21,67,500
25,50,00025,50,000
20132013
Jan.01Balance b/d21,67,500July.01Depreciation (6 months)54,187
July.01Profit and Loss (Profit)31,687July.01Insurance Co. (Insurance claim)7,00,000
Dec.31Depreciation2,16,750
Dec.31Balance c/d12,28,250
21,99,18721,99,187
20142014
Jan.01Balance c/d12,28,250Dec.31Depreciation1,84,237
Dec.31Balance c/d10,44,013
12,28,25012,28,250

Hence, the bus account balance is ₹. 10,44,013.

Concepts covered in this chapter

  • Depreciation
  • Meaning of Depreciation
  • Features of Depreciation
  • Depreciation and other Similar Terms
  • Depletion
  • Amortization
  • Causes of depreciation
  • Obsolescence
  • Matching of Costs and Revenue
  • Cost of asset
  • Depreciable cost
  • Estimated useful life
  • Methods of calculating depreciation amount
  • Straight Line Method
  • Written Down Value Method
  • Annual Charge of Depreciation

FAQ:

1. What is the straight line method of depreciation?

Under this method, a fixed percentage of the original cost is written off every year, as annual depreciation

2. What is Capital reserve?

Capital reserve is created out of Capital profits which is used for writing off capital losses or issue of bonus shares.

3. What is Revenue reserve?

Revenue reserve is created out of the revenue profits which arise out of the normal operating activities of the business.

ಇತರೆ ವಿಷಯಗಳು:

1st Puc All Subject Notes 

ಪ್ರಥಮ ಪಿ.ಯು.ಸಿ ಕನ್ನಡ ಪಠ್ಯಪುಸ್ತಕ Pdf

First PUC All Textbooks Pdf

1 ರಿಂದ 12 ನೇ ತರಗತಿ ಎಲ್ಲಾ ನೋಟ್ಸ್

1 ರಿಂದ 12ನೇ ತರಗತಿ ಎಲ್ಲಾ ಪಠ್ಯಪುಸ್ತಕಗಳ Pdf

1 ರಿಂದ 9ನೇ ತರಗತಿ ಕಲಿಕಾ ಚೇತರಿಕೆ 

All Notes App

Leave a Reply

Your email address will not be published. Required fields are marked *