DK Goel Solutions Class 11 Chapter 16 Depreciation

1. DK Goel Solutions Class 11 Chapter 16 Depreciation DK Goel Accountancy Class 11 Solutions Chapter 16 Depreciation, which is laid out by master Accountancy instructors from the most recent form of DK Goel Class 11 Accountancy books. We, at Dk Goel Solutions help students to fathom every one of the hypotheses, specifically. There are various ideas in Accountancy, however the ideas of Trial Balance, Depreciation and Bank Reconciliation Statement (BRS) are required. DK Goel Solutions Class 11 – Chapter 16 Short Answer Questions for DK Goel Solutions Class 11 Chapter 16 Depreciation Question 1: Define depreciation. State any two reasons for providing depreciation. Solution 1: Depreciation may be characterized as a persistent and constant decrease in an asset's quality, quantity or worth.

2. The two explanations for offering depreciation are below:— 1.) To calculate the actual benefit or loss from the profit & loss account. 2.) For the balance sheet to reflect the real financial condition. Question 2: Give four advantages of Straight Line Method of providing depreciation. Solution 2: The benefits of using the Straight Line Approach are below: 1.) Simplicity 2.) Properties can be written off entirely 3.) Initial expense perception and up-to-date depreciation 4.) Equity of the Burden of Depreciation Question 3: State four merits of written down value method of providing depreciation. Solution 3: The merits in using the written down value form are below:— 1.) Quick to measure 2.) Equivalent fee against revenue 3.) In later years, no undue burden 4.) Wealth balance is never written down to zero Question 4: State two demerits of Reducing Instalment Method of providing depreciation. Solution 4: Here are the Instalment Reduction Process demerits:— 1.) The commodity cannot be written off entirely. 2.) Interest Factor Exclusion Question 5: Distinguish between ‘Straight Line Method’ and ‘Written Down Value Method’ of providing depreciation. Solution 5: Straight Line Method 1.) Per year, the same amount of depreciation is paid. 2.) Depreciation paid in excess to the initial asset value. 3.) The valuation of an asset can be reduced to zero by this approach.

3. 4.) The Income Tax authorities do not approve this process. Written Down Value Method 1.) Year by year, depreciation will be declining. 2.) The diminished value is paid for depreciation. 3.) By the WDV method, the asset's value cannot be negative. 4.) This system is licensed by the tax authorities for taxes. Question 6: Write short note on ‘Original Cost Method’ of providing depreciation with a suitable example. Solution 6: The original cost approach is known as the straight line method. Depreciation is paid at a fixed percentage of the initial cost of the commodity in this process. The depreciation rate remains the same as the year and the process is also known as 'Equal Instalments Method' and 'Set Instalment Method' as well. Under this procedure, the deprecation number is determined using the following formula:— Yearly Depreciation =(Cost of Assets-Scrap Value)/(Estimated life of Asset) For Example:- A machinery purchased is Rs. 1,00,000 and its scrap value is Rs. 10,000 its estimated life of 10 years, the depreciation will be:- Annual Depreciation = (Cost of Assets-Scrap Value)/(Estimated life of Asset) =(1,00,000 - 10,000)/10 =Rs.9,000 Rate of Depreciation =(Amount of Depreciation)/(Total Cost of Asset)×100 =9,000/1,00,000×100 =9% Question 7: What is asset disposal account? Why is it prepared? Give journal entries for preparation of this account when an asset is disposed off. Solution 7: It is necessary to open a new account called a "asset disposal account" if any of the asset is sold or disposed of. It offers a straightforward and full view of all the activities involved with the selling of an asset and illustrates the benefit and loss from the sale of the asset. (i) transfer the book value of asset to Asset disposal account:- Asset Disposal A/c Dr.

4. To Asset A/c (ii) Sale of Asset:- Bank A/c Dr. To Asset Disposal A/c (iii) Profit on sale of asset Asset Disposal A/c Dr. To Profit on sale of asset A/c Or Loss on sale of asset Loss on sale of asset A/c Dr. To Asset Disposal A/c Practical Questions for DK Goel Solutions Class 11 Chapter 16 Depreciation Question 1: On 1st April, 2015, a limited company purchased a Machine for Rs. 1,90,000 and spent Rs. 10,000 on its installation. At the date of purchase, it was estimated that the scrap value of the machine would be Rs. 50,000 at the end of sixth year. Give Machine Account and Depreciation A/c in the books of the Company for 4 years after providing depreciation by Fixed Instalment Method. The books are closed on 31st March every year. Solution 1:

5. Working Note:-

6. 1.) Total cost of Machinery = Rs. 1,90,000 + Rs. 10,000 = Rs. 2,00,000 2.) Yearly Depreciation = (Cost of Assets-Scrap Value)/(Estimated life of Asset) =(2,00,000 -50,000)/6 =Rs.25,000 Rate of Depreciation =(Amount of Depreciation)/(Total Cost of Asset)×100 =25,000/2,00,000×100 =12.5% Also read - Dk Goel Solutions Class 12 Download Free study materials for your Examinations at DK goel Solutions