# Depreciation, Provisions and Reserves Notes | SwaVid Depreciation, Provisions and Reserves, NCERT Class 11 Accountancy: notes with key ideas, formats, common mistakes and 3 quick checks with worked answers. Canonical: https://www.swavid.com/cbse/class-11/accountancy/chapter/depreciation-provisions-and-reserves Source: https://www.swavid.com/cbse/class-11/accountancy/chapter/depreciation-provisions-and-reserves # Depreciation, Provisions and Reserves ## Definitions, formats and formulas ## Key ideas ## Common mistakes ## Quick checks ## Keep going ## Questions parents ask ## Class 11 Accountancy on SwaVid ### Concept and causes of depreciation ### Straight line method ### Written down value method ### Methods of recording depreciation ### Provisions and reserves ### Next chapter ### Related chapter ### Related chapter ### All chapters SwaVid › CBSE › Class 11 › Accountancy › Depreciation, Provisions and Reserves Notes written by SwaVid from the NCERT textbook. Class 11 Accountancy, Chapter 7. Key ideas, definitions and common mistakes. CBSE does not print marks for a single chapter. Short answer. This chapter explains the concepts, causes, and accounting treatment of depreciation on fixed assets alongside provisions and reserves. Students learn how to calculate depreciation using the straight line and written down value methods and record them properly. Source: NCERT Financial Accounting I (Reprint 2026-27) , Chapter 7, Depreciation, Provisions and Reserves Depreciation is the gradual and permanent fall in the book value of a tangible fixed asset due to wear and tear, passage of time, obsolescence, or accident. It is an allocated cost, not an evaluation of market value, and is charged to the Profit and Loss Account. Under the straight line method, a fixed and equal amount of depreciation is charged every accounting year throughout the useful life of the asset. The value of the asset reduces to zero or its scrap value at the end of its estimated working life. Under the written down value method, depreciation is computed at a fixed percentage on the opening book value of the asset each year. The annual depreciation charge decreases year after year, and the book value never reduces to absolute zero. Depreciation can be recorded directly by crediting the Asset Account, which reduces the asset value on the balance sheet. Alternatively, it can be credited to a Provision for Depreciation Account while maintaining the asset at its original historical cost. A provision is a charge against profit created for a known liability whose exact amount cannot be determined with substantial accuracy. A reserve is an appropriation of profit created to strengthen the financial position or to meet future unforeseen contingencies. Try each question first. Then tap it to see the answer. Total Cost = ₹ 90,000 + ₹ 10,000 = ₹ 1,00,000 Depreciable Value = ₹ 1,00,000 - ₹ 10,000 = ₹ 90,000 Annual Depreciation = ₹ 90,000 / 5 = ₹ 18,000 ₹ 18,000 First year depreciation = 10% of ₹ 50,000 = ₹ 5,000 Book value at the beginning of second year = ₹ 50,000 - ₹ 5,000 = ₹ 45,000 Second year depreciation = 10% of ₹ 45,000 = ₹ 4,500 Book value at the end of second year = ₹ 45,000 - ₹ 4,500 = ₹ 40,500 ₹ 40,500 Book value of machine = Cost - Accumulated Depreciation = ₹ 20,000 - ₹ 8,000 = ₹ 12,000 Loss on sale = Book value - Sale proceeds = ₹ 12,000 - ₹ 11,000 = ₹ 1,000 Loss of ₹ 1,000 Financial Statements - I . Trial Balance and Rectification of Errors . Financial Statements - II . The 9 chapters of Class 11 Accountancy . CBSE does not give marks to one chapter. It prints marks for units or parts, and the chapter list page shows them all. No. They are written by SwaVid from the NCERT textbook. The CBSE curriculum is the reference for what is assessed. Financial Statements - I. SwaVid is an AI tutor for Indian students in Classes 6 to 12. It finds the earlier ideas a child missed, then teaches today’s chapter. Start free to see how it works. - Ch 7 NCERT book - 80 marks, theory paper - 3 quick checks - Ignoring the period of use when calculating depreciation on a new asset . Calculate depreciation proportionately for the number of months the asset is actually put to use during the accounting year when the rate is given per annum. - Calculating written down value depreciation on original cost every year . Apply the depreciation percentage to the reducing book value at the beginning of the year, not the original purchase price. - Treating provisions as an appropriation of profits . Treat provisions as a charge against profits because they must be provided for even if the business incurs a net loss. ## Key Links - [CBSE](https://www.swavid.com/cbse) - [Class 11](https://www.swavid.com/cbse/class-11) - [Accountancy](https://www.swavid.com/cbse/class-11/accountancy/chapters) - [Start free →](https://www.swavid.com/signup) - [All 9 chapters](https://www.swavid.com/cbse/class-11/accountancy/chapters) - [NCERT Financial Accounting I (Reprint 2026-27)](https://ncert.nic.in/textbook.php) - [Open notes](https://www.swavid.com/cbse/class-11/accountancy/chapter/financial-statements-i) - [Open notes](https://www.swavid.com/cbse/class-11/accountancy/chapter/trial-balance-and-rectification-of-errors) - [Open notes](https://www.swavid.com/cbse/class-11/accountancy/chapter/financial-statements-ii) - [Class 11 Accountancy](https://www.swavid.com/cbse/class-11/accountancy/chapters) - [Start free →](https://www.swavid.com/signup)