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Page No 14.48:

Question 1: Calculate the Amount of annual Depreciation and Rate of Depreciation under Straight Line Method (SLM) from the following:

Purchased a second-hand machine for ₹ 96,000, spent ₹ 24,000 on its cartage, repairs and installation, estimated useful life of machine 4 years. Estimated residual value ₹ 72,000.

ANSWER:

Page No 14.48:

Question 2: On 1st April, 2016, X Ltd. purchased a machine costing ₹ 4,00,000 and spent ₹ 50,000 on its installation. The estimated life of the machinery is 10 years, after which its residual value will be ₹ 50,000 only. Find the amount of annual depreciation according to the Fixed Instalment Method and prepare Machinery Account for the first three years. The books are closed on 31st March every year.

ANSWER:

Page No 14.48:

Question 3: On 1st April, 2015, furniture costing ₹ 55,000 was purchased. It is estimated that its life is 10 years at the end of which it will be sold for ₹ 5,000. Additions are made on 1st April 2016 and 1st October, 2018 to the value of ₹ 9,500 and ₹ 8,400 (Residual values ₹ 500 and ₹ 400 respectively). Show the Furniture Account for the first four years, if Depreciation is written off according to the Straight Line Method.

ANSWER:

Page No 14.48:

Question 4: From the following transactions of a concern, prepare the Machinery Account for the year ended 31st March, 2019:

Note:

Repair and renewal made on December 31, 2018 will not be recorded in Machinery Account because, this repair was made after putting the Machinery into use.

Page No 14.48:

Question 5: An asset was purchased for ₹ 10,500 on 1st April, 2012. The scrap value was estimated to to be ₹ 500 at the end of asset's 10 years' life. Straight Line Method of depreciation was used. The accounting year ends on 31st March every year. The asset was sold for ₹ 600 on 31st March, 2019. Calculate the following.

(i) The Depreciation expense for the year ended 31st March, 2013.

(ii) The net book value of the asset on 31st March, 2017.

(iii) The gain or loss on sale of the asset on 31st March, 2019.
ANSWER:

(i) Depreciation Expense for the year ended March 31, 2013 is Rs 1000

(ii) The Net Book Value of the asset on March 31, 2017 is Rs 5,500

(iii) Loss on Sale of the asset on March 31, 2019 is Rs 2,900

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FAQs on Depreciation (Part - 1) - Accountancy Class 11 - Commerce

1. What is depreciation in commerce?

Ans. Depreciation in commerce refers to the decrease in the value of an asset over time due to wear and tear, obsolescence, or other factors. It is a method of allocating the cost of an asset over its useful life.

2. How is depreciation calculated?

Ans. Depreciation can be calculated using various methods such as straight-line method, declining balance method, or units of production method. The most common method is the straight-line method, where depreciation is calculated by dividing the cost of the asset by its useful life.

3. Why is depreciation important in accounting?

Ans. Depreciation is important in accounting as it helps in accurately reflecting the true value of assets in financial statements. It allows businesses to allocate the cost of an asset over its useful life, matching the cost to the revenue generated by the asset.

4. What factors affect the depreciation of an asset?

Ans. Several factors can affect the depreciation of an asset, including the age of the asset, its useful life, the method of depreciation used, the level of maintenance and repairs, and changes in market conditions or technology.

5. How does depreciation impact taxes?

Ans. Depreciation can have a significant impact on taxes. Businesses can claim depreciation expenses as deductions on their tax returns, which can reduce their taxable income and lower their tax liability. However, the specific rules and regulations regarding depreciation for tax purposes may vary depending on the country and tax laws.

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Document Description: Depreciation (Part - 1) for Commerce 2024 is part of Accountancy Class 11 preparation. The notes and questions for Depreciation (Part - 1) have been prepared according to the Commerce exam syllabus. Information about Depreciation (Part - 1) covers topics like and Depreciation (Part - 1) Example, for Commerce 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises and tests below for Depreciation (Part - 1).

Introduction of Depreciation (Part - 1) in English is available as part of our Accountancy Class 11 for Commerce & Depreciation (Part - 1) in Hindi for Accountancy Class 11 course. Download more important topics related with notes, lectures and mock test series for Commerce Exam by signing up for free. Commerce: Depreciation (Part - 1) | Accountancy Class 11 - Commerce

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