Answer 1:

Introduction

Every asset get depreciate in its useful life. This depreciation amount reduces
the cost of that asset & also recorded to expense side & ultimately reduces net
income. Different methods of depreciation show different amount & this impact
on financial statement.

Concept and Application

Accumulated Depreciation is the total quantum of deprecation of a company's

means, while deprecation expenditure is the quantum that has been downgraded
for a single period.

Deprecation is a counting entry that represents the reduction of an asset's cost

over its usefullife.In other words, deprecation spreads out the cost of an asset
over the times, allocating how important of the asset that has been used up in a
time, until the asset is obsolete or no longer in use. Without deprecation, a
company would dodge the entire cost of an asset in the time of the purchase,
which could negatively impactprofitability.Put another way, accumulated
depreciation is the total quantum of an asset's cost that has been allocated as
deprecation expenditure since the asset was put into use.

KEY TAKEAWAYS
• Depreciation is an account system that spreads out the cost of an asset over its
useful life.
• Deprecation expenditure is the cost of an asset that has been downgraded for a
single period, and shows how important of the asset's value has been used up in
that time.
• Accumulated depreciation is the total quantum of deprecation expenditure that
has been allocated for an asset since the asset was put into use.
• Deprecation expenditure is honoured on the income statement as anon-cash
expenditure that reduces the company's net income.
• Accumulated depreciation appears in a contra asset account on the balance
distance reducing the gross quantum of fixed means reported.
What Is Accumulated Depreciation?
The accumulated depreciation account is a contra asset account on a company's
balance distance. It represents a credit balance. It appears as a reduction from
the gross quantum of fixed means reported.
Accumulated depreciation specifies the total quantum of an asset's wear and tear
to date in the asset's useful life.
The quantum of accumulated depreciation for an asset or group of means will
increase over time as deprecation charges continue to be recorded.
When an asset is ultimately vended or put out of use, the accumulated
depreciation associated with that asset will be reversed, barring all records of
the asset from the company's balancesheet.What Are
deprecationExpenses?Depreciation charges, on the other hand, are the allocated
portion of the cost of a company's fixed means for a certain period. Deprecation
expenditure is honoured on the income statement as anon-cash expenditure that
reduces the company's net income or profit.
For counting purposes, the deprecation expenditure is debited, and the
accumulated depreciation iscredited.Depreciation expenditure is considered an
on-cash expenditure because the recreating yearly deprecation entry doesn't
involve a cash sale. Because of this, the statement of cash overflows prepared
under the circular system adds the deprecation expenditure back to calculate
cash inflow from operations. The styles used to calculate deprecation include
straight line, declining balance, sum- of- the- times' integers, and units of
production.
Depreciation and Accumulated depreciation Example Tracking the deprecation
expenditure of an asset is important for reporting purposes because it spreads
the cost of the asset over the time its inuse.The simplest way to calculate this
expenditure is to use the straight- line system. The formula for this is (cost of
asset minus salvage value) divided by usefullife.Say a company spent$ 50,000
for outfit for long- term use in its operations. It estimates that the salvage value
will be$ 2,000 and the asset's useful life, 15 times.
The deprecation expenditure per time would be$ 3,200. ($ 50,000-$ 2,000)/ 15
= $ 3,200 Accumulated depreciation totals deprecation expenditure since the
asset has been in use. Therefore, after five times, accumulated depreciation
would total$ 16,000. $ 3,200 x 5 = $ 16,000
Accumulated depreciation and Bespeak Value Accumulated depreciation is
used to calculate an asset’s net book value, which is the value of an asset carried
on the balance distance. The formula for net book value is bring an asset minus
accumulateddepreciation.For illustration, if a company bought a piece of
publishing outfit for$ 100,000 and the accumulated depreciation is$ 35,000, also
the net book value of the printing outfit is$ 65,000.$ 100,000-$ 35,000 = $
65,000. Accumulated depreciation cannot exceed an asset’scost.However, the
asset’s accumulated depreciation is removed from the balance distance,
 If an asset is vended or disposed of. Net book value is not inescapably
reflective of the request value of an asset. Deprecation expenditure is recorded
on the income statement as an expenditure or disbenefit, reducing net income.
Accumulated depreciation isn't recorded independently on the balance distance.
Rather, it's recorded in a contra asset account as a credit, reducing the value of
fixed assets.
Depreciation Method Examples The four styles allowed by generally accepted
account principles (GAAP) are the forenamed straight- line, declining balance,
sum- of- the- times' integers (SYD), and units of product.1 To see how the
computations work, let's use the before illustration of the company that buys
outfit for$ 50,000, sets the salvage value at$ 2,000 and useful life at 15 times. In
addition, the deprecation rate is 20. The estimate for units to be produced over
the asset's lifetime is 100,000. Factual units produced equals 5,000. The
computation for the straight- line system (preliminarily shown) is (cost of asset-
salvage value)/ useful life ($ 50,000-$ 2,000)/ 15 = $ 3,200$ 3,200 will be the
periodic deprecation expenditure for the life of the asset.
The computation for the declining balance system is current book value x
deprecation rate$ 50,000 x.20 = $ 10,000 the first time's deprecation
expenditure would be$ 10,000. Posterior times' charges will change grounded
on the changing current book value.
For illustration, in the alternate time, current book value would be$ 50,000-$
10,000, or$ 40,000. Therefore, deprecation expenditure would decline to$
8,000($ 40,000 x.20). The computation for the sum- of- the- times' integers
system is (remaining lifetime/ SYD) x (asset cost- salvage cost) Given an SYD
of 120(1 2 3 4 5 6 7 8 9 10 11 12 13 14 15), (15/120) x ($ 50,000-$ 2,000) = $
6,000. The first time's deprecation expenditure would be$ 6,000. Posterior
times' charges will change as the figure for the

Conclusion

Above we have mentioned the Different methods of depreciation show different

amount & this impact on financial statement.
 Answer 2

Introduction

Investment means growth of current savings by aiming with more return in

future. In finance investment refers to allocation of surplus money, after all
expenditures in some investment avenues. Elaborate different investment
avenues.

Concept and Application

There are multiple investment options to choose from in India

1. Fixed Deposits

Fixed deposits are regarded as one of the most popular investments in India.
They give a fixed rate of return for a specific period and considered as a low-
threatoption.Banks offer FDs. The interest rate varies from one deposit to
another and changes from time to time. Although FDs have a cinch- in
period, utmost fiscal institutions permit loans and overdraft installations
against them

.2. Collective Funds

Investing in collective finances is a prudent choice as there are different

types of finances to suit the short- and long- term requirements of colourful
investors. Before making investment opinions, it's judicious to make use of a
collective fund calculator to understand how it aligns with your fiscal
objects.

3 Recreating Deposits

Like FDs, Recreating Deposits (RDs) allow an investor to save a specific

sum in periodic instalments. You can deposit a fixed sum every month for a
specific period with a bank. Like FDs, RDs are also low- threat and give
guaranteed returns.

4. Public Provident
 Fund The PPF is a long- term savings scheme backed by the Government of
India with a cinch- in period of 15 times. Still, PPF investments are eligible
for duty deductions and are also fairly safe. The government generally
revises the PPF interest rate every quarter. Investors are also eligible for
partial recessions and loans against the PPF upon meeting certain conditions.

5. Employee Provident

Fund The EPF is a withdrawal savings scheme specifically for salaried

workers. Yearly benefactions are made from a hand’s payment, while the
employer contributes an original quantum to the corpus. EPFs are eligible for
a duty deduction under Section 80C of the Income Tax Act, 1961 and the
final quantum after maturity is duty-free.

6. National Pension Scheme

NPS is a withdrawal pension scheme introduced by the Government of India.

Through regular investments, you can make a corpus that can give you with
a regular pension after withdrawal. Investors can also withdraw from the
fund incompletely after withdrawal.

7. Stocks

Stocks relate to copping shares in a company, giving the investor power

stake. It can be profitable when the company grows in future. Investing in
stocks for the long- term aids in capital appreciation. Short- term trading,
still, can be unsafe.

Conclusion

We have mention the Investment means growth of current savings by aiming

with more return in future. In finance investment refers to allocation of surplus
money, after all expenditures in some investment avenues. Elaborate different
investment avenues.
 Answer 3 (A)

Introduction

Seller transfer goods to the buyer to generate an income. But revenue from sale
transaction is recognized when some basic conditions are fulfilled. Explain
those basic conditions.

Concept and application

According to the IFRS criteria, for profit to be honoured, the following

conditions must be satisfied

1. Pitfalls and prices of power have been transferred from the dealer to the
buyer.

2. The dealer loses control over the goods vended.

3. The collection of payment from goods or services is nicely assured.

4. The quantum of profit can be nicely measured.

5. Costs of profit can be nicely measured.

Conditions

(1) And (2) are appertained to as Performance. Regarding performance, it occurs

when the dealer has done what's to be anticipated to be entitled
topayment.Condition
(3) Is appertained to as Collectability. The dealer must have a reasonable
anticipation that he or she'll be paid for theperformance.Conditions

(4) And (5) are appertained to as Measurability. Due to the account guideline of
the matching principle, the dealer must be suitable to match the earnings to the
charges. Hence, both earnings and charges should be suitable to be nicely
measured.
Conclusion

We have mention how Seller transfer goods to the buyer to generate an income.
But revenue from sale transaction is recognized when some basic conditions are
fulfilled. Explain those basic conditions.
 Answer 3 (b)

Introduction

ABC Ltd. purchased goods at the cost of Rs.50, 00,000. Till the end of the year
75% of the stocks were sold. The company wants to disclose closing stock.
Expected sale value is Rs.13, 50,000 and the commission at 10% on sale is
payable. Advice what is the correct closing stock to be disclosed at the end of
the year?

Concept and Application

As per AS – 2, valuation of inventories,

Inventory should be valued as per cost price or net realizable value, whichever is
lower. In the given problem cost price ` 50 lakh. Net realizable value is (100 –
10) % of ` 13, 50,000 = ` 12, 15,000. So, value of closing stock should be taken
as ` 12, 15,000 being the lower.

Conclusion

We have mention the correct closing stock to be disclosed at the end of the year