What are the common methods of computing depletion charge ?

Related Mcqs:

1. The Saudi Arabian Oil Refinery developed an oil well which is estimated to contain 5,000,000 barrels of oil at an initial cost of $ 50,000,000. What is the depletion charge during the year where it produces half million barrels of oil? Use Unit or Factor method in computing depletion?

   A. $ 5,000,000.00 B. $ 5,010,000.00 C. $ 5,025,000.00 D. $ 5,050,000.00...

2. 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...

3. The depletion allowance method of computing depletion is commonly known as ___________________?

   A. Unit method B. Percentage method C. Factor method D. Sinking fund method...

4. What is another term for “unit method” for computing depletion ?

   A. Initial cost method B. Percentage method C. Factor method D. Sinking fund method...

5. Shell Philippines, a multinational company, has a total gross income for a particular year of P 50,000,000. The taxable income after taking all deductions except for depletion is P 18,500,000. What is the allowable depletion allowance for that particular year? Take percentage of gross income for oil as 22%?

   A. P 9,358.41 B. P 9,228.45 C. P 9,250.00 D. P 9,308.45...

6. 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...

7. 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...

8. 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...

9. 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...

10. 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...