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Accountancy · Class 11 Commerce

Ch 10Depreciation Accounting — Class 11 Accountancy, concept-first.

Every fixed asset used in a business — machinery, furniture, a vehicle, a building — gradually loses value over time as it is used, ages, or becomes outdated, well before it is finally disposed of.

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Key concepts

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Straight Line Method

Under the Straight Line Method (Fixed Instalment Method), an equal amount of depreciation — (Cost − Scrap Value) ÷ Useful Life — is charged every year, computed on the ORIGINAL cost throughout.

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Chapter contents

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Meaning, Need and Causes of Depreciation

Every fixed asset used in a business — machinery, furniture, a vehicle, a building — gradually loses value over time as it is used, ages, or becomes outdated, well before it is finally disposed of.

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Straight Line Method (SLM)

Under the Straight Line Method (SLM) — also called the Fixed Instalment Method or Original Cost Method — an EQUAL amount of depreciation is charged every year throughout the asset's useful life, compu…

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Written Down Value (WDV) Method

Under the Written Down Value (WDV) Method — also called the Diminishing Balance Method or Reducing Balance Method — depreciation is charged EVERY YEAR at a FIXED PERCENTAGE, but applied to the asset's…

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Comparison of the Straight Line Method and the Written Down Value Method

Basis Straight Line Method (SLM) Written Down Value Method (WDV) --------- Base for computing depreciation Original cost, every year Book value (reducing every year) Amount of depreciation each year S…

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Recording Depreciation: Direct to Asset Account vs Provision for Depreciation Account

Depreciation can be recorded in a business's books in one of two ways:

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Sale (Disposal) of an Asset

When a depreciable asset is sold before the end of its useful life, the transaction requires: 1. Charging depreciation on the asset up to the date of sale (for the part of the year it was held, if bei…

Sample & Board Papers

Sample papers and previous-year board questions for this subject.

+Show 23 questions23 questions
  1. Q1Residual value of an asset means the amount that it can fetch on sale at the ________ of its useful life. (a) end (b) middle (c) beginning (…Preview
  2. Q2Under Straight Line Method, the amount of depreciation is : (a) Constant for all years (b) Increasing every year (c) Fluctuating every year…Preview
  3. Q3A firm purchased a Machine for ₹ 50,000 Erection charges amounted to ₹ 5,000. Effective life of the Machine is 5 years. Calculate the amount…Preview
  4. Q4An asset is purchased for ₹ 50,000. The rate of depreciation is 15% p.a. Calculate the annual depreciation for the first two years under dim…Preview
  5. Q5(a) (i) Define depreciation. (ii) Explain any three causes of depreciation. OR (b) Prepare trading and profit and loss account in the books…Preview
  6. Q6Under the written down value method of depreciation, the amount of depreciation is : (a) Decreasing every year (b) Increasing every year (c)…Preview
  7. Q7Depreciation is to be calculated from the date when : (a) Asset is received at business premises (b) Asset is put to use (c) Invoice of asse…Preview
  8. Q8Find out the rate of depreciation under Straight Line method from the following details : Original cost of the asset - ₹ 10,000 Estimated li…Preview
  9. Q9What are the causes for depreciation ?Preview
  10. Q10Which one of the following is correctly matched ? (a) Bad debt - Creditor (b) Depreciation - Trading Account (c) Indian Income Tax Act - 196…Preview
  11. Q11The process of allocating the cost of an intangible asset over a period of time is called ______. (a) Profit and Loss account (b) Amortisati…Preview
  12. Q12Depreciation is caused by : (a) Usage (b) Obsolescence (c) Lapse of time (d) (a), (b) and (c)Preview
  13. Q13If the rate of depreciation is same, then the amount of depreciation under Straight Line method vis-a-vis Written Down Value method will be…Preview
  14. Q14What are wasting assets ?Preview
  15. Q15What are the objectives of providing Depreciation ?Preview
  16. Q16(a) M/s. Ramco Textile Mills purchased Machinery on 1st April 2014 for Rs. 2,00,000 on credit from M/s. Nila & Co. and spent Rs. 10,000 on i…Preview
  17. Q17Which Depreciation method shall be efficient if repairs and maintenance cost of an asset increases as it grows older ? (a) Sinking fund meth…Preview
  18. Q18Match the following : (1) Straight line method (2) Diminishing balance method (3) Annuity method (4) Revaluation method (i) Depreciation is…Preview
  19. Q19Joy and Co., purchased Machinery on 1st April 2016 for ₹ 75,000. On 31st March 2018, it sold the machinery for ₹ 62,000. Depreciation is to…Preview
  20. Q20From the following particulars prepare Machinery account for 2 years under Straight Line method of providing depreciation. Machinery was pur…Preview
  21. Q21(a) On 1st April 2020, Sudha and Company purchased machinery for ₹ 32,000. To install the machinery expenses incurred was ₹ 14,000. Deprecia…Preview
  22. Q22Which method shall be efficient, if repairs and maintenance cost of an asset increases as it grows older. (a) Straight line method (b) Reduc…Preview
  23. Q23Calculate the rate of depreciation under straight line method from the following information: Purchased a second hand machinery on 1.1.2016…Preview

More questions

+Show 10 questions10 questions
  1. Q1A machine was purchased for ₹1,00,000. Its estimated scrap value at the end of its useful life of 9 years is ₹10,000. Compute the annual dep…Free
  2. Q2A machine costing ₹80,000 is depreciated at 20% per annum under the Written Down Value Method. Compute the depreciation for each of the firs…Free
  3. Q3A machine costing ₹50,000 has an estimated life of 5 years and a scrap value of ₹5,000. Compare the depreciation charged and the closing boo…Free
  4. Q4Kavya Enterprises purchased a machine on 1 July 2024 for ₹60,000, with an estimated life of 5 years and no scrap value, charging depreciatio…Preview
  5. Q5On 1 April 2024, Kavya Enterprises purchased furniture for ₹40,000, to be depreciated at 10% per annum under the Straight Line Method, using…Preview
  6. Q6A machine purchased for ₹50,000 on 1 April 2023, depreciated at 10% per annum under the Straight Line Method (charged directly to the Asset…Preview
  7. Q7A machine costing ₹60,000, purchased on 1 April 2023, was depreciated at 10% per annum under the Straight Line Method using a Provision for…Preview
  8. Q8State two advantages of maintaining a Provision for Depreciation Account instead of charging depreciation directly to the Asset Account.Preview
  9. Q9Distinguish between 'wear and tear' and 'obsolescence' as causes of depreciation, with an example of each.Preview
  10. Q10A machine was purchased on 1 June 2025 for ₹36,000 and sold on 31 January 2026 for ₹33,000, in the same accounting year (April 2025 to March…Preview