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

Related Mcqs:

1. 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...

2. 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...

3. 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...

4. 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...

5. 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...

6. 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...

7. 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...

8. By the condition of a will, the sum of P20,000 is left to a girl to be held in trust fund by her guardian until it amounts to P50,000. When will the girl receive the money if fund invested at 8% compounded quarterly ?

   A. 11.23 years B. 11.46 years C. 11.57 years D. 11.87 years...

9. 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...

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

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