Depreciation means the gradual fall in the book value of a fixed asset due to use, time or obsolescence. Important Questions Class 11 Accountancy Chapter 7 help students practise depreciation, SLM, WDV, asset disposal, provisions and reserves with exam-ready answers.
Chapter 7, Depreciation, Provisions and Reserves, is one of the most practice-heavy chapters in Class 11 Accountancy. Students need clear concepts and regular numerical practice because small mistakes in dates, rates, asset cost or sale value can change the final answer. These Important Questions Class 11 Accountancy Chapter 7 move from definitions to depreciation sums, journal entries, asset disposal, provisions and reserves.
Key Takeaways from Important Questions Class 11 Accountancy Chapter 7
| Detail |
Information |
| Chapter Name |
Depreciation, Provisions and Reserves |
| Subject |
Accountancy |
| Class |
Class 11 |
| Main Concept |
Decline in book value of fixed assets |
| Important Methods |
Straight Line Method and Written Down Value Method |
| Practical Areas |
Depreciation calculation, asset disposal, provision for depreciation |
| Theory Areas |
Causes, need, features, provisions, reserves |
| Common Mistake |
Ignoring date of purchase or sale |
| Best Practice |
Solve numerical questions step by step |
Depreciation Questions Class 11: Chapter Overview
Depreciation questions class 11 test both theory and calculations.
Depreciation is charged because fixed assets help a business earn revenue for more than one accounting period. The full asset cost should not be charged in the year of purchase. It should be spread over the useful life of the asset.
The chapter covers these core areas:
- Meaning of depreciation
- Features of depreciation
- Causes of depreciation
- Need for depreciation
- Straight Line Method
- Written Down Value Method
- Asset disposal account
- Provision for depreciation
- Provisions and reserves
- Secret reserves
Depreciation Class 11: Most Important Concepts
Depreciation class 11 concepts should be revised before solving numerical questions.
| Concept |
Exam-Ready Meaning |
| Depreciation |
Fall in book value of a fixed asset |
| Depreciable Asset |
Asset used for more than one accounting period |
| Depreciable Cost |
Cost of asset minus residual value |
| Useful Life |
Period for which the asset can be used profitably |
| Scrap Value |
Estimated value at the end of useful life |
| Obsolescence |
Loss in value due to outdated technology |
| Depletion |
Fall in value due to extraction of natural resources |
| Amortisation |
Writing off intangible assets over useful life |
Depreciation Class 11 Questions with Answers
These depreciation class 11 questions with answers cover the most common short-answer areas.
Important Questions Class 11 Accountancy Chapter 7 with Answers
Q1. What is depreciation?
Depreciation is the permanent, continuing and gradual fall in the book value of a fixed asset.
It happens because of use, passage of time, obsolescence, depletion or abnormal factors.
Q2. Why is depreciation treated as an expense?
Depreciation is treated as an expense because it represents the cost of a fixed asset used during an accounting period.
It is charged to the profit and loss account to calculate true profit.
Q3. Is depreciation a cash expense?
Depreciation is a non-cash expense.
It reduces profit and asset value, but it does not involve cash outflow in the year depreciation is charged.
Q4. Name two methods of calculating depreciation.
The two main methods are Straight Line Method and Written Down Value Method.
Straight Line Method charges equal depreciation every year. Written Down Value Method charges depreciation on the reduced book value.
Q5. What is depreciable cost?
Depreciable cost means the cost of an asset minus its estimated net residual value.
This amount is charged as depreciation over the useful life of the asset.
CBSE Class 11 Accountancy Important Questions Chapter-Wise
Depreciation Important Questions Class 11: Short Answer Type
Depreciation important questions class 11 often test causes, features, need and accounting treatment.
| Question |
Answer Hint |
| What are the features of depreciation? |
Decline in fixed asset value, non-cash expense, continuing process, expired cost |
| What are the causes of depreciation? |
Wear and tear, passage of time, legal expiry, obsolescence, abnormal factors |
| Why is depreciation needed? |
Matching cost with revenue, true profit, correct financial position, legal compliance |
| What is depletion? |
Fall in value due to extraction of natural resources |
| What is amortisation? |
Writing off intangible assets such as patents or copyrights |
| What factors affect depreciation? |
Cost of asset, residual value and useful life |
| What is provision for depreciation? |
Separate account used to record accumulated depreciation |
| What is asset disposal account? |
Account prepared to calculate profit or loss on sale of asset |
Class 11 Accountancy Chapter 7 Depreciation Numerical Questions
Class 11 accountancy chapter 7 depreciation numerical questions usually involve asset cost, depreciation rate, method, date of purchase, date of sale and provision for depreciation.
Students should always check four details before solving.
| Step |
What to Check |
| Asset Cost |
Include purchase price, freight, carriage, installation and commissioning cost |
| Depreciation Method |
Straight Line Method or Written Down Value Method |
| Time Period |
Full year, half year or exact number of months |
| Sale or Disposal |
Calculate depreciation up to the date of sale |
Straight Line Method Questions Class 11
Straight Line Method charges the same amount of depreciation every year.
It uses the original cost or depreciable cost of the asset.
Formula:
Depreciation = (Cost of Asset - Estimated Scrap Value) / Estimated Useful Life
Straight Line Method Depreciation Question 1
Q1. A machine was purchased for ₹2,00,000. Installation expenses were ₹20,000. Its estimated useful life is 10 years. Its scrap value is ₹20,000. Calculate annual depreciation under Straight Line Method.
| Particulars |
Amount |
| Purchase price |
₹2,00,000 |
| Add: Installation expenses |
₹20,000 |
| Total cost |
₹2,20,000 |
| Less: Scrap value |
₹20,000 |
| Depreciable cost |
₹2,00,000 |
| Useful life |
10 years |
| Annual depreciation |
₹20,000 |
Answer: Annual depreciation is ₹20,000.
Straight Line Method Depreciation Question 2
Q2. A machine was purchased on 1 October 2025 for ₹1,80,000. Installation cost was ₹20,000. Depreciation is charged at 10% per annum on original cost. Accounts close on 31 March every year. Calculate depreciation for 2025-26.
| Particulars |
Amount |
| Cost of machine |
₹1,80,000 |
| Installation cost |
₹20,000 |
| Total cost |
₹2,00,000 |
| Annual depreciation at 10% |
₹20,000 |
| Period used |
6 months |
| Depreciation for 2025-26 |
₹10,000 |
Answer: Depreciation for 2025-26 is ₹10,000.
Written Down Value Method Questions Class 11
Written Down Value Method charges depreciation on the book value of the asset.
The depreciation amount reduces every year because the written down value keeps falling. This method is useful for assets like machinery, vehicles and computers.
Written Down Value Method Depreciation Question
Q1. A machine was purchased for ₹2,10,000 on 1 April 2024. Depreciation is charged at 10% per annum on written down value. Prepare depreciation calculation for three years.
| Year |
Opening WDV |
Depreciation at 10% |
Closing WDV |
| 2024-25 |
₹2,10,000 |
₹21,000 |
₹1,89,000 |
| 2025-26 |
₹1,89,000 |
₹18,900 |
₹1,70,100 |
| 2026-27 |
₹1,70,100 |
₹17,010 |
₹1,53,090 |
Answer: Closing written down value after three years is ₹1,53,090.
Depreciation Practical Questions Class 11
Depreciation practical questions class 11 often combine purchase, addition, sale and part-year depreciation.
Students should write the working note clearly before the final answer.
Depreciation Practical Question on Purchase of Additional Asset
Q1. A firm purchased machinery for ₹1,00,000 on 1 April 2024. It purchased another machine for ₹50,000 on 1 October 2024. Depreciation is charged at 10% per annum on original cost. Accounts close on 31 March every year. Calculate depreciation for 2024-25.
| Asset |
Cost |
Period Used |
Depreciation |
| First machine |
₹1,00,000 |
12 months |
₹10,000 |
| Second machine |
₹50,000 |
6 months |
₹2,500 |
| Total depreciation |
|
|
₹12,500 |
Answer: Total depreciation for 2024-25 is ₹12,500.
Depreciation Practical Question with Plant Account and Provision for Depreciation Account
Q1. A company purchased a plant on 1 July 2025 for ₹3,00,000. It spent ₹50,000 on installation. Depreciation is charged at 15% p.a. under Straight Line Method. The plant was sold for ₹1,50,000 on 1 October 2027. A new plant was purchased on the same date for ₹4,00,000. Accounts close on 31 December every year. Prepare Plant Account and Provision for Depreciation Account.
Plant Account
| Dr. |
|
|
Cr. |
|
|
| Date |
Particulars |
Amount |
Date |
Particulars |
Amount |
| 2025 Jul. 1 |
Bank |
₹3,50,000 |
2025 Dec. 31 |
Balance c/d |
₹3,50,000 |
|
|
₹3,50,000 |
|
|
₹3,50,000 |
| 2026 Jan. 1 |
Balance b/d |
₹3,50,000 |
2026 Dec. 31 |
Balance c/d |
₹3,50,000 |
|
|
₹3,50,000 |
|
|
₹3,50,000 |
| 2027 Jan. 1 |
Balance b/d |
₹3,50,000 |
2027 Oct. 1 |
Provision for Depreciation |
₹1,18,125 |
| 2027 Oct. 1 |
Bank |
₹4,00,000 |
2027 Oct. 1 |
Bank |
₹1,50,000 |
|
|
|
2027 Oct. 1 |
Profit and Loss A/c |
₹81,875 |
|
|
|
2027 Dec. 31 |
Balance c/d |
₹4,00,000 |
|
|
₹7,50,000 |
|
|
₹7,50,000 |
Provision for Depreciation Account
| Dr. |
|
|
Cr. |
|
|
| Date |
Particulars |
Amount |
Date |
Particulars |
Amount |
| 2025 Dec. 31 |
Balance c/d |
₹26,250 |
2025 Dec. 31 |
Depreciation A/c |
₹26,250 |
|
|
₹26,250 |
|
|
₹26,250 |
| 2026 Dec. 31 |
Balance c/d |
₹78,750 |
2026 Jan. 1 |
Balance b/d |
₹26,250 |
|
|
|
2026 Dec. 31 |
Depreciation A/c |
₹52,500 |
|
|
₹78,750 |
|
|
₹78,750 |
| 2027 Oct. 1 |
Plant A/c |
₹1,18,125 |
2027 Jan. 1 |
Balance b/d |
₹78,750 |
| 2027 Dec. 31 |
Balance c/d |
₹15,000 |
2027 Oct. 1 |
Depreciation A/c |
₹39,375 |
|
|
|
2027 Dec. 31 |
Depreciation A/c |
₹15,000 |
|
|
₹1,33,125 |
|
|
₹1,33,125 |
Answer: Loss on sale of plant is ₹81,875. Closing balance of the new plant is ₹4,00,000.
Working Notes
| Particulars |
Calculation |
Amount |
| Cost of plant |
₹3,00,000 + ₹50,000 |
₹3,50,000 |
| Annual depreciation |
₹3,50,000 × 15% |
₹52,500 |
| Depreciation for 2025 |
₹52,500 × 6/12 |
₹26,250 |
| Depreciation for 2026 |
Full year |
₹52,500 |
| Depreciation for 2027 till sale |
₹52,500 × 9/12 |
₹39,375 |
| Total depreciation on old plant |
₹26,250 + ₹52,500 + ₹39,375 |
₹1,18,125 |
| Book value on sale date |
₹3,50,000 - ₹1,18,125 |
₹2,31,875 |
| Sale value |
Given |
₹1,50,000 |
| Loss on sale |
₹2,31,875 - ₹1,50,000 |
₹81,875 |
Depreciation Practical Question with Machinery Account and Disposal Account
This type of question is important because it tests depreciation, sale of asset and loss calculation together. Students should split the machinery sold from the total machinery before preparing the final account.
Q2. Saraswati Ltd. purchased machinery costing ₹10,00,000 on 1 January 2024. It purchased another machinery on 1 May 2025 for ₹15,00,000 and another on 1 July 2026 for ₹12,00,000. Part of machinery costing ₹2,00,000 from the 2024 purchase was sold for ₹75,000 on 31 October 2026. Depreciation is charged at 10% p.a. on original cost. Accounts close on 31 December every year. Prepare Machinery Account, Provision for Depreciation Account and Machinery Disposal Account.
Machinery Account
| Dr. |
|
|
Cr. |
|
|
| Date |
Particulars |
Amount |
Date |
Particulars |
Amount |
| 2024 Jan. 1 |
Bank |
₹10,00,000 |
2024 Dec. 31 |
Balance c/d |
₹10,00,000 |
|
|
₹10,00,000 |
|
|
₹10,00,000 |
| 2025 Jan. 1 |
Balance b/d |
₹10,00,000 |
2025 Dec. 31 |
Balance c/d |
₹25,00,000 |
| 2025 May 1 |
Bank |
₹15,00,000 |
|
|
|
|
|
₹25,00,000 |
|
|
₹25,00,000 |
| 2026 Jan. 1 |
Balance b/d |
₹25,00,000 |
2026 Oct. 31 |
Machinery Disposal A/c |
₹2,00,000 |
| 2026 Jul. 1 |
Bank |
₹12,00,000 |
2026 Dec. 31 |
Balance c/d |
₹35,00,000 |
|
|
₹37,00,000 |
|
|
₹37,00,000 |
Provision for Depreciation Account
| Dr. |
|
|
Cr. |
|
|
| Date |
Particulars |
Amount |
Date |
Particulars |
Amount |
| 2024 Dec. 31 |
Balance c/d |
₹1,00,000 |
2024 Dec. 31 |
Depreciation A/c |
₹1,00,000 |
|
|
₹1,00,000 |
|
|
₹1,00,000 |
| 2025 Dec. 31 |
Balance c/d |
₹3,00,000 |
2025 Jan. 1 |
Balance b/d |
₹1,00,000 |
|
|
|
2025 Dec. 31 |
Depreciation A/c |
₹2,00,000 |
|
|
₹3,00,000 |
|
|
₹3,00,000 |
| 2026 Oct. 31 |
Machinery Disposal A/c |
₹76,667 |
2026 Jan. 1 |
Balance b/d |
₹3,00,000 |
| 2026 Dec. 31 |
Balance c/d |
₹5,13,333 |
2026 Oct. 31 |
Depreciation A/c |
₹16,667 |
|
|
|
2026 Dec. 31 |
Depreciation A/c |
₹2,73,333 |
|
|
₹5,90,000 |
|
|
₹5,90,000 |
Machinery Disposal Account
| Dr. |
|
|
Cr. |
|
|
| Date |
Particulars |
Amount |
Date |
Particulars |
Amount |
| 2026 Oct. 31 |
Machinery A/c |
₹2,00,000 |
2026 Oct. 31 |
Provision for Depreciation A/c |
₹76,667 |
|
|
|
2026 Oct. 31 |
Bank |
₹75,000 |
|
|
|
2026 Oct. 31 |
Profit and Loss A/c, Loss |
₹48,333 |
|
|
₹2,00,000 |
|
|
₹2,00,000 |
Working Notes
| Particulars |
Calculation |
Amount |
| Depreciation on machinery sold for 2024 |
₹2,00,000 × 10% |
₹20,000 |
| Depreciation on machinery sold for 2025 |
₹2,00,000 × 10% |
₹20,000 |
| Depreciation on machinery sold till 31 Oct. 2026 |
₹2,00,000 × 10% × 10/12 |
₹16,667 |
| Total depreciation on machinery sold |
₹20,000 + ₹20,000 + ₹16,667 |
₹56,667 |
| Book value on sale date |
₹2,00,000 - ₹56,667 |
₹1,43,333 |
| Sale value |
Given |
₹75,000 |
| Loss on sale |
₹1,43,333 - ₹75,000 |
₹68,333 |
Depreciation Class 11 Extra Questions on SLM and WDV Difference
Depreciation class 11 extra questions often ask the difference between Straight Line Method and Written Down Value Method.
| Basis |
Straight Line Method |
Written Down Value Method |
| Basis |
Original cost |
Book value |
| Depreciation Amount |
Same every year |
Reduces every year |
| Asset Value |
Can become zero or scrap value |
Usually does not become zero |
| Repair Burden |
Total burden may increase later |
Total burden remains more balanced |
| Best For |
Assets with stable use |
Assets with higher repair needs later |
| Tax Recognition |
Usually not recognised under income tax |
Recognised under income tax |
Important Questions of Depreciation Class 11: Long Answer Type
Important questions of depreciation class 11 often test explanation, comparison and accounting treatment.
Q1. Explain the concept of depreciation and state its causes.
Depreciation means a permanent and gradual fall in the book value of fixed assets.
It occurs because of wear and tear, passage of time, expiry of legal rights, obsolescence and abnormal factors such as fire or accident.
Q2. Why should depreciation be charged every year?
Depreciation should be charged to match cost with revenue and calculate true profit.
It also helps show the correct financial position in the balance sheet. If depreciation is not charged, assets and profits may appear overstated.
Q3. Distinguish between depreciation, depletion and amortisation.
| Basis |
Depreciation |
Depletion |
Amortisation |
| Used For |
Tangible fixed assets |
Natural resources |
Intangible assets |
| Example |
Machinery, furniture |
Mines, quarries |
Patents, copyrights |
| Cause |
Use, time, obsolescence |
Extraction |
Expiry of useful life |
Q4. Explain the two methods of recording depreciation.
Depreciation can be recorded by charging it directly to the asset account.
It can also be recorded through Provision for Depreciation Account. In the first method, asset value reduces every year. In the second method, asset appears at original cost, and accumulated depreciation appears separately.
Q5. What is Asset Disposal Account?
Asset Disposal Account records all transactions related to the sale or disposal of an asset.
It records original cost, accumulated depreciation, sale value and profit or loss on sale.
Depreciation Extra Questions Class 11 for Practice
Depreciation extra questions class 11 help students build calculation speed.
| Question |
Practice Focus |
| A machine costs ₹3,00,000 and scrap value is ₹30,000. Useful life is 9 years. Find annual depreciation. |
Straight Line Method |
| Furniture worth ₹80,000 is bought on 1 July. Depreciation is 10% on original cost. Find depreciation for the year ending 31 March. |
Part-year depreciation |
| A vehicle costs ₹5,00,000. Depreciation is 20% on WDV. Find value after two years. |
Written Down Value |
| A machine costing ₹1,50,000 is sold after 3 years for ₹90,000. Depreciation is 10% SLM. Find profit or loss. |
Disposal of asset |
| A firm maintains Provision for Depreciation Account. Pass entries for depreciation of ₹25,000. |
Journal entries |
| Machinery is purchased for ₹2,00,000. Freight is ₹10,000 and installation is ₹15,000. Find asset cost. |
Cost of asset |
Depreciation Provisions and Reserves Class 11 Questions
Depreciation provisions and reserves class 11 questions are important because the chapter does not end with depreciation.
| Topic |
Meaning |
| Provision |
Charge against profit for a known liability or expected loss |
| Reserve |
Appropriation of profit to strengthen financial position |
| General Reserve |
Reserve created without a specific purpose |
| Specific Reserve |
Reserve created for a specific purpose |
| Capital Reserve |
Reserve created out of capital profits |
| Revenue Reserve |
Reserve created out of revenue profits |
| Secret Reserve |
Reserve not shown clearly in the balance sheet |
Provision and Reserve Difference Class 11
| Basis |
Provision |
Reserve |
| Nature |
Charge against profit |
Appropriation of profit |
| Purpose |
Known liability or expected loss |
Strengthens financial position |
| Effect on Profit |
Reduces profit |
Created after profit |
| Compulsion |
Necessary |
Usually optional |
| Dividend Use |
Cannot be used |
General reserve can be used |
Depreciation Questions for Practice with Solutions Class 11
Depreciation questions for practice with solutions class 11 should combine theory and numerical clarity.
| Question |
Answer |
| Is depreciation charged on current assets? |
No, depreciation applies to fixed assets. |
| Is depreciation based on market value? |
No, it is based on cost allocation. |
| Does depreciation involve cash outflow? |
No, it is a non-cash expense. |
| What is the formula for SLM depreciation? |
Cost minus scrap value divided by useful life. |
| What is WDV? |
Written down value means original cost minus depreciation till date. |
| Which account records accumulated depreciation? |
Provision for Depreciation Account. |
| What happens when an asset is sold above book value? |
Profit on sale is credited to Profit and Loss Account. |
| What happens when an asset is sold below book value? |
Loss on sale is debited to Profit and Loss Account. |
Class 11 Depreciation Questions: Common Mistakes
Class 11 depreciation questions become easier when students avoid these mistakes.
| Mistake |
Correct Approach |
| Ignoring installation cost |
Add it to asset cost |
| Charging full-year depreciation for part-year use |
Calculate depreciation for months used |
| Confusing SLM and WDV |
Check whether depreciation applies on original cost or book value |
| Forgetting depreciation up to date of sale |
Charge depreciation before calculating profit or loss |
| Treating provision as reserve |
Provision is a charge, reserve is appropriation |
| Showing asset at wrong value |
Follow the recording method given in the question |