Straight line method depreciates cost evenly throughout the useful life of the fixed asset.
Straight line depreciation is calculated as follows:
Depreciation per annum = (Cost – Residual Value) / Useful Life
Where:
Cost includes the initial and any subsequent capital expenditure.
Residual Value is the estimated scrap value at the end of the useful life of the asset. As the residual value
is expected to be recovered at the end of an asset’s useful life, there is no need to charge the portion of
cost equaling the residual value.
Useful Life is the estimated time period an asset is expected to be used from the time it is available for
use to the time of its disposal or termination of use.
Here Cost of the machinery = purchase price + installation expenses = 50,000 + 6,000 = Rs. 56,000
Depreciation = (56,000 – 6,000)/10 = Rs. 5,000

While recording salaries the amount of PF will be deducted from the salary and the balance amount will be shown in the profit and loss A/C.
The amount at which salaries expense will be shown in the Profit and Loss A/c is 16,000 – 1,000 = Rs. 15,000.

Since any amount paid for the personal expenses for the proprietor from the firm will be treated as drawings, the amount Rs. 10,000 paid for personal income tax of the proprietor will be treated as drawings and will be deducted from his capital.

Discounting bills of exchange is a financial service, where the Bank purchases drawn bills, from the domestic trade transactions, confirmed in particular with an invoice - with right of recourse to you - and credits you with the amount of the bill of exchange less discount interest and additional costs related to the bill, accrued in advance from the discount date to the bill payment term.
Here amount of the bill = 1,00,000
The bill was accepted by Hari on 1st January and was discounted on 4th january so,
Amount to be paid to bank on discounting at 12%pa = 1,00,000 × 12/100 × 3/12 = Rs. 3,000

Average Profits Method:
Under this method goodwill is calculated on the basis of the average of some agreed number of past
years. The average is then multiplied by the agreed number of years. This is the simplest and the most
commonly used method of the valuation of goodwill.
Goodwill = Average Profits × Number of years of Purchase
Before calculating the average profits the following adjustments should be made in the profits of the firm:
(a) Any abnormal profits should be deducted from the net profits of that year.
(b) Any abnormal loss should be added back to the net profits of that year.
(c) Non operating incomes e.g. Income from investments etc should be deducted from the net profits
of that year.
Profit of the year 2010: profit less abnormal gain = 40,000 – 5,000 = Rs. 35,000
Profit for the year 2011: profit add abnormal loss = 50,000 + 10,000 = Rs. 60,000
Average profit of last 2 years = (35,000 + 60,000)/2 = Rs. 47,500
Goodwill = 47,500 × 1 = Rs. 47,500

Inventory must be recorded at the lower of cost or net realizable value. Cost includes the purchase cost and any other costs necessary in bring the inventories to their present location and condition. These may include costs incurred directly in the production of inventory such as direct labor and production overheads (i.e. conversion costs) and other expenses such as transportation and handling charges, taxes and duties that may not be recoverable from tax authorities. However, costs do not include general and administrative costs which cannot reasonable attributed to the cost of inventory. Similarly, selling and distribution expenses, storage costs and excessive expenditure resulting from abnormal wastage shall not be included in the cost of inventory. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. This is simply the expected revenue from the sale of inventory after deducting any further costs that are necessary in order to sell the inventory

Hidden goodwill is that goodwill the amount of which is not mentioned in the deed , but the amount of which has to calculated by capitalisation method or with the help profit sharing ratio.
Capitalisation of Average Profits Method:
Under this method we calculate the average profits and then assess the capital needed for earning such average profits on the basis of normal rate of return. Such capital is called capitalised value of average profits. The formula is:
Capitalised Value of Average Profits = Average Profits × (100 / Normal Rate of Return)
Capital Employed = Assets – Liabilities
Goodwill = Capitalised Value of Average Profits – Capital Employed
Here capitalized value of average profits = 1,10,000 × 1,000/10 = 11,00,000
Capital employed = 11,00,000 – 1,00,000 = 10,00,000
And goodwill = 11,00,000 – 10,00,000 = Rs. 1,00,000