How to Use These Solutions
These NCERT solutions cover every exercise question from CBSE Class 11 Accountancy Chapter 6 — Depreciation, Provisions and Reserves. For the best results:
1. Attempt each problem on your own before reading the solution 2. Write the formula before substituting values — this earns method marks 3. Compare your journal entries with the given solutions 4. Verify your arithmetic — depreciation calculations cascade across years; one error affects all subsequent years 5. Re-attempt any problem where your answer differs
Key Concepts
Before solving the exercises, review these essentials:
- Straight Line Method (SLM): Annual Depreciation = (Cost - Salvage Value) / Useful Life; same amount each year
- Written Down Value Method (WDV): Depreciation = Rate x Book Value at start of year; decreasing amount each year
- Cost of asset = Purchase price + Freight + Installation + Registration (all expenses to make the asset usable)
- Book Value = Cost - Accumulated Depreciation
- Provision = Charge against profits (mandatory); for known liability/loss of uncertain amount
- Reserve = Appropriation of profits (discretionary); to strengthen financial position
- Provision for Doubtful Debts = Debited to P&L A/c; shown as deduction from Debtors on Balance Sheet
- Provision for Discount on Debtors = Calculated on good debts (Debtors - Provision for Doubtful Debts)
- Journal entries: Depreciation A/c Dr. to Asset A/c; then P&L A/c Dr. to Depreciation A/c
Intext Questions
Annual Depreciation = (2,00,000 - 20,000) / 10 = Rs 18,000 per year
Rate of Depreciation = (18,000 / 2,00,000) x 100 = 9%
Machinery Account (SLM)
| Date | Particulars | Debit (Rs) | Date | Particulars | Credit (Rs) |
|---|---|---|---|---|---|
| Apr 1, 2022 | To Bank A/c | 2,00,000 | Mar 31, 2023 | By Depreciation A/c | 18,000 |
| Mar 31, 2023 | By Balance c/d | 1,82,000 | |||
| Total | 2,00,000 | Total | 2,00,000 | ||
| Apr 1, 2023 | To Balance b/d | 1,82,000 | Mar 31, 2024 | By Depreciation A/c | 18,000 |
| Mar 31, 2024 | By Balance c/d | 1,64,000 | |||
| Total | 1,82,000 | Total | 1,82,000 | ||
| Apr 1, 2024 | To Balance b/d | 1,64,000 | Mar 31, 2025 | By Depreciation A/c | 18,000 |
| Mar 31, 2025 | By Balance c/d | 1,46,000 | |||
| Total | 1,64,000 | Total | 1,64,000 | ||
| Apr 1, 2025 | To Balance b/d | 1,46,000 |
Journal Entries (for each year):
| Date | Particulars | L/F | Debit Rs | Credit Rs |
|---|---|---|---|---|
| Apr 1, 2022 | Machinery A/c Dr. | 2,00,000 | ||
| To Bank A/c | 2,00,000 | |||
| (Being machinery purchased) | ||||
| Mar 31 (each year) | Depreciation A/c Dr. | 18,000 | ||
| To Machinery A/c | 18,000 | |||
| (Being depreciation charged) | ||||
| Mar 31 (each year) | Profit and Loss A/c Dr. | 18,000 | ||
| To Depreciation A/c | 18,000 | |||
| (Being depreciation transferred to P&L A/c) |
Since the machine was purchased on 1st October 2022, depreciation for 2022-23 is for only 6 months.
Year 1 (2022-23): 1st Oct 2022 to 31st Mar 2023 = 6 months
Depreciation = 20% x 1,50,000 x (6/12) = Rs 15,000 Closing Balance = 1,50,000 - 15,000 = Rs 1,35,000
Year 2 (2023-24): Full year
Depreciation = 20% x 1,35,000 = Rs 27,000 Closing Balance = 1,35,000 - 27,000 = Rs 1,08,000
Year 3 (2024-25): Full year
Depreciation = 20% x 1,08,000 = Rs 21,600 Closing Balance = 1,08,000 - 21,600 = Rs 86,400
Machinery Account (WDV)
| Date | Particulars | Debit (Rs) | Date | Particulars | Credit (Rs) |
|---|---|---|---|---|---|
| Oct 1, 2022 | To Bank A/c | 1,50,000 | Mar 31, 2023 | By Depreciation A/c | 15,000 |
| Mar 31, 2023 | By Balance c/d | 1,35,000 | |||
| Total | 1,50,000 | Total | 1,50,000 | ||
| Apr 1, 2023 | To Balance b/d | 1,35,000 | Mar 31, 2024 | By Depreciation A/c | 27,000 |
| Mar 31, 2024 | By Balance c/d | 1,08,000 | |||
| Total | 1,35,000 | Total | 1,35,000 | ||
| Apr 1, 2024 | To Balance b/d | 1,08,000 | Mar 31, 2025 | By Depreciation A/c | 21,600 |
| Mar 31, 2025 | By Balance c/d | 86,400 | |||
| Total | 1,08,000 | Total | 1,08,000 | ||
| Apr 1, 2025 | To Balance b/d | 86,400 |
Chapter-End Exercise
Exercise 1: On 1st January 2023, M/s Ravi Brothers purchased a second-hand machine for Rs 80,000 and spent Rs 10,000 on its overhaul and Rs 5,000 on its installation. Depreciation is provided at 10% per annum on the Straight Line Method. The accounts are closed on 31st December each year. Show the Machinery Account for three years.
Total Cost = Purchase Price + Overhaul + Installation = 80,000 + 10,000 + 5,000 = Rs 95,000
Annual Depreciation = (95,000 - 0) x 10% = Rs 9,500 (assuming salvage value is zero since not given)
Machinery Account (SLM)
| Date | Particulars | Debit (Rs) | Date | Particulars | Credit (Rs) |
|---|---|---|---|---|---|
| Jan 1, 2023 | To Bank A/c | 95,000 | Dec 31, 2023 | By Depreciation A/c | 9,500 |
| Dec 31, 2023 | By Balance c/d | 85,500 | |||
| Total | 95,000 | Total | 95,000 | ||
| Jan 1, 2024 | To Balance b/d | 85,500 | Dec 31, 2024 | By Depreciation A/c | 9,500 |
| Dec 31, 2024 | By Balance c/d | 76,000 | |||
| Total | 85,500 | Total | 85,500 | ||
| Jan 1, 2025 | To Balance b/d | 76,000 | Dec 31, 2025 | By Depreciation A/c | 9,500 |
| Dec 31, 2025 | By Balance c/d | 66,500 | |||
| Total | 76,000 | Total | 76,000 | ||
| Jan 1, 2026 | To Balance b/d | 66,500 |
Exercise 2: M/s Deepak & Co. purchased a machine on 1st April 2022 for Rs 3,00,000. They charge depreciation at 15% per annum on the WDV method. On 1st October 2024, they purchased another machine for Rs 2,00,000. Prepare the Machinery Account for three years ending 31st March 2025.
Machine 1 (purchased 1st April 2022, Rs 3,00,000):
| Year | Opening Balance | Depreciation (15%) | Closing Balance |
|---|---|---|---|
| 2022-23 | 3,00,000 | 45,000 | 2,55,000 |
| 2023-24 | 2,55,000 | 38,250 | 2,16,750 |
| 2024-25 | 2,16,750 | 32,512.50 | 1,84,237.50 |
Machine 2 (purchased 1st October 2024, Rs 2,00,000):
- Only 6 months depreciation for 2024-25
- Depreciation = 15% x 2,00,000 x (6/12) = Rs 15,000
- Closing Balance = 2,00,000 - 15,000 = Rs 1,85,000
Machinery Account
| Date | Particulars | Debit (Rs) | Date | Particulars | Credit (Rs) |
|---|---|---|---|---|---|
| Apr 1, 2022 | To Bank A/c (M1) | 3,00,000 | Mar 31, 2023 | By Depreciation A/c | 45,000 |
| Mar 31, 2023 | By Balance c/d | 2,55,000 | |||
| Total | 3,00,000 | Total | 3,00,000 | ||
| Apr 1, 2023 | To Balance b/d | 2,55,000 | Mar 31, 2024 | By Depreciation A/c | 38,250 |
| Mar 31, 2024 | By Balance c/d | 2,16,750 | |||
| Total | 2,55,000 | Total | 2,55,000 | ||
| Apr 1, 2024 | To Balance b/d | 2,16,750 | Mar 31, 2025 | By Depreciation A/c | 47,512.50 |
| Oct 1, 2024 | To Bank A/c (M2) | 2,00,000 | Mar 31, 2025 | By Balance c/d | 3,69,237.50 |
| Total | 4,16,750 | Total | 4,16,750 | ||
| Apr 1, 2025 | To Balance b/d | 3,69,237.50 |
Note: Total depreciation for 2024-25 = Machine 1 (Rs 32,512.50) + Machine 2 (Rs 15,000) = Rs 47,512.50
Exercise 3: From the following information, calculate the amount of Provision for Doubtful Debts and Provision for Discount on Debtors:
- Total Debtors: Rs 80,000
- Bad Debts during the year: Rs 5,000 (already written off)
- Provision for Doubtful Debts is to be created at 5% on debtors
- Provision for Discount on Debtors is to be created at 3% on good debtors
Step 1: Calculate Provision for Doubtful Debts
Provision for Doubtful Debts = 5% of Rs 80,000 = Rs 4,000
Step 2: Calculate Good Debtors
Good Debtors = Total Debtors - Provision for Doubtful Debts = 80,000 - 4,000 = Rs 76,000
Step 3: Calculate Provision for Discount on Debtors
Provision for Discount on Debtors = 3% of Rs 76,000 = Rs 2,280
Journal Entries:
| Date | Particulars | L/F | Debit Rs | Credit Rs |
|---|---|---|---|---|
| Profit and Loss A/c Dr. | 4,000 | |||
| To Provision for Doubtful Debts A/c | 4,000 | |||
| (Being provision for doubtful debts created at 5%) | ||||
| Profit and Loss A/c Dr. | 2,280 | |||
| To Provision for Discount on Debtors A/c | 2,280 | |||
| (Being provision for discount on debtors created at 3% of good debts) |
Balance Sheet Extract:
| Particulars | Amount (Rs) |
|---|---|
| Debtors | 80,000 |
| Less: Provision for Doubtful Debts | (4,000) |
| Good Debtors | 76,000 |
| Less: Provision for Discount on Debtors | (2,280) |
| Net Debtors | 73,720 |
Exercise 4: Distinguish between Provision and Reserve (any five points).
| Basis | Provision | Reserve |
|---|---|---|
| 1. Nature | Charge against profits | Appropriation of profits |
| 2. Compulsion | Must be created even if there is a loss | Created only when there are profits |
| 3. Purpose | For a known liability/loss of uncertain amount | To strengthen financial position |
| 4. Effect on profit | Reduces net profit | Does not reduce net profit; allocates it |
| 5. Account debited | Profit and Loss Account | Profit and Loss Appropriation Account |
| 6. Dividend | Must be created before deciding dividends | Created after deciding dividends |
| 7. Disclosure | Shown as deduction from asset or as liability | Shown under Reserves and Surplus |
Related Resources
- [Chapter 6 Guide — Depreciation, Provisions and Reserves](/school/cbse/class/11/accountancy/cbse-depreciation-provisions-reserves)
- [All Class 11 Accountancy Solutions](/school/cbse/class/11/accountancy/solutions)
- [Class 11 Accountancy Subject Guide](/school/cbse/class/11/accountancy)