Class 11 Accountancy — Chapter 7: Depreciation, Provisions and Reserves

What you'll learn

• ▸Meaning, Features and Causes of Depreciation
• ▸Distinction between Depreciation, Depletion, and Amortisation
• ▸Factors Affecting Depreciation Calculation
• ▸Straight Line Method (SLM) of Depreciation
• ▸Written Down Value (WDV) Method of Depreciation
• ▸Accounting for Depreciation and Disposal of Assets
• ▸Concept of Provisions
• ▸Concept of Reserves
• ▸Distinction between Provisions and Reserves
• ▸Types of Reserves

Chapter Summary

--- PAGE 1 --- 11110CH07 Depreciation, Provisions and Reserves 7 LEARNING OBJECTIVES After studying this chapter, you will be able to : • explain the meaning of depreciation and distinguish it from amortisation and depletion; • state the need for charging depreciation and identify its causes; • compute depreciation using straight line and written down value methods; • record transactions relating to depreciation and disposition of assets; • explain the meaning and purpose of creating provisions and reserves; • distinguish between reserves and provisions; • explain the nature of various types of provisions and reserves including secret reserve. Matching principle requires that the revenue of a given period is matched against the expenses for the same period. This ensures ascertainment of the correct amount of profit or loss. If some cost is incurred whose benefi…

Practice Questions from this Chapter

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1. Calculate machine's depreciation rate. Get Solution →
2. Explain asset's useful life. Get Solution →
3. Compare straight-line and WDV methods. Get Solution →
4. What is the general meaning of 'Depreciation' as described in the chapter? Get Solution →
5. Which term is used for the process of writing-off the cost of intangible assets like patents and copyrights? Get Solution →
6. The term 'depletion' is used in the context of which type of assets? Get Solution →
7. According to the text, what are the two main methods for calculating the amount of depreciation? Get Solution →
8. What is a key feature of depreciation mentioned in the chapter? Get Solution →

Did you know?

• 💡 The Great Pyramid of Giza has been 'wearing out' for over 4,500 years.
• 💡 Your brand new car loses about 10% of its value the moment you drive it off the lot.
• 💡 Some ancient Roman roads are still in use today, proving extreme durability.
• 💡 The first cell phone in 1973 weighed over two pounds and cost nearly $4,000.
• 💡 Gold teeth from ancient Etruscans, over 2,500 years old, still hold their value.

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