ABC Corporation makes it a policy that for any new equipment purchased, the annual depreciation cost should not exceed 20% of the first cost at any time with no salvage value. Determine the length of service life necessary if the depreciation used is the SYD method ?

Related Mcqs:

1. In what method of computing depreciation where it assumes that the annual cost of depreciation is a fixed percentage of the book value at the beginning of the year ?

   A. Straight line method
   B. Sinking fund method
   C. Sum-of-year digit method
   D. Declining balance method

2. A feasibility study shows that a fixed capital investment of P10,000,000 is required for a proposed construction firm and an estimated working capital of P2,000,000. Annual depreciation is estimated to be10% of the fixed capital investment. Determine the rate of return on the total investment if the annual profit is P3,500,000?

   A. 28.33 %
   B. 29.17 %
   C. 30.12 %
   D. 30.78 %

3. A machine costs of P 8,000 and an estimated life of 10 years with a salvage value of P 500. What is its book value after 8 years using straight line method ?

   A. P 2,000.00
   B. P 2,100.00
   C. P 2,200.00
   D. P 2,300.00

4. A telephone switchboard 100 pair cable can be made up with either enameled wire or tinned wire. There will be 400 soldered connections. The cost of soldering a connection on the enameled wire will be P 1.65 on the tinned wire, it will be P 1.15. A 100- pair cable made up with enameled wire cost P 0.55 per linear foot and those made up of tinned wire cost P 0.75 per linear foot. Determine the length of cable run in feet so that the cost of each installation would be the same ?

   A. 1,000 feet
   B. 1,040 feet
   C. 1,100 feet
   D. 1,120 feet

5. In what method of computing depreciation where it assumes that the loss in value is directly proportional to the age of the equipment or asset ?

   A. Straight line method
   B. Sinking fund method
   C. Sum-of-year digit method
   D. Declining balance method

6. An asset is purchased for P 9,000.00. Its estimated economic life is 10 years after which it will be sold for P 1,000.00. Find the depreciation in the first three years using sum-of-years digit method____________________?

   A. P 3,279.27
   B. P 3,927.27
   C. P 3,729.27
   D. P 3,792.72

7. The unrecovered depreciation which results due to poor estimates as to the life of the equipment is called _____________________?

   A. Sunk cost
   B. Economic life
   C. In-place value
   D. Annuity

8. In computing depreciation of an equipment, which of the following represents the first cost ?

   A. The original purchase price and freight charges
   B. Installation expenses
   C. Initial taxes and permit fees
   D. All of the above

9. What is defined as the certificate of indebtedness of corporation usually for a period not less than 10 years and guaranteed by a mortgage on certain assets of a corporation ?

   A. Bond
   B. T-bills
   C. Stock
   D. Promissory note

10. What do you call the after-tax present worth of all depreciation effects over the depreciation period of the asset ?

    A. Asset recovery
    B. Depreciation recovery
    C. Period recovery
    D. After-tax recovery