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 ?

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. In what method of computing depreciation where it assumes that a sinking fund is established in which funds will accumulate for replacement purposes ?

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

3. 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 ?

   A. 7 eyars B. 8 years C. 9 years D. 10 years...

4. 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...

5. 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...

6. Under the depletion allowance method in computing depreciation, the depletion charge is equal to either ________________ which ever is smaller ?

   A. Fixed percentage of gross income or the net taxable income B. Fixed percentage of gross income or 50% of the net taxable income C. 50% of the fixed percentage of gross income or 50% of the net taxable income D. 50% of the fixed percentage of gross income or the net taxable income...

7. What is the main reason why the sinking fund method of computing depreciation is seldom used in the industry ?

   A. Unstable economy B. Rate of interest cannot be exactly determined C. The initial deprecation is high D. The initial depreciation is low...

8. What type of depreciation is due to the reduction in the demand for the function that the equipment or asset was designed to render ?

   A. Functional depreciation B. Design depreciation C. Physical depreciation D. Demand depreciation...

9. What type of depreciation is due to the reduction of the physical ability of an equipment or asset to produce results ?

   A. Functional depreciation B. Design depreciation C. Physical depreciation D. Demand depreciation...

10. As applied to capitalized asset, the distribution of the initial cost by a periodic changes to operation as in depreciation or the reduction of a debt by either periodic or irregular prearranged programs is called ___________________?

    A. Annuity B. Amortization C. Capital recovery D. Annuity factor...