A. Unit method
B. Percentage method
C. Factor method
D. Sinking fund method
Correct Answer: Percentage method ✔
Last Updated: January 22, 2019
Related MCQs
- Under the depletion allowance method in computing depreciation, the depletion charge is equal to either __________ which ever is smaller ?
- What are the common methods of computing depletion charge ?
- What is defined as the reduction of the value of certain natural resources such as mines, oil, timber, quarries, etc. due to the gradual extraction of its contents ?
- The functional depreciation is sometimes called __________?
- What type of depreciation is due to the reduction of the physical ability of an equipment or asset to produce results ?
- What type of depreciation is due to the reduction in the demand for the function that the equipment or asset was designed to render ?
- The declining balance method is also known as __________?
- 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 ?
- In what method of computing depreciation where it assumes that a sinking fund is established in which funds will accumulate for replacement purposes ?
- 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 ?
- What is defined as the reduction or fall of the value of an asset due to constant use and passage of time ?
- The price at which the callable bond will be redeemed from the bondholder is called __________?
- What is the feature of some bonds whereby the issuer can redeem it before it matures ?
- What type of bond which can be redeemed before maturity date ?
- What type of bond where the corporation’s owner name are recorded and the interest is paid periodically to the owners with their asking for it ?
- A type of bond where the corporation pledges securities which it owns such as the stock or bonds of one of its subsidiaries ?
- A bond without any security behind them except a promise to pay by the issuing corporation is called __________?
- What bond whose security is a mortgage on certain specified assets of the corporation ?
- A type of bond to which are attached coupons indicating the interest due and the date when such interest is to be paid is called __________?
- What type of bond whose guaranty is in lien on railroad equipment, such as freight and passenger cars, locomotives, etc ?
- What type of bond is issued jointly by two or more corporations ?
- What refers to a document that shows proof of legal ownership of a financial security ?
- A leading shoe manufacturer produces a pair of Lebron James signature shoes at a labor cost of P 900.00 a pair and a material cost of P 800.00 a pair. The fixed charges on the business are P 5,000,000 a month and the variable costs are P 400.00 a pair. Royalty to Lebron James is P 1,000 per pair of shoes sold. If the shoes sell at P 5,000 a pair, how many pairs must be produced each month for the manufacturer to break-even ?
- 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 manufacturing firm maintains one product assembly line to produce signal generators. Weekly demand for the generators is 35 units. The line operates for 7 hours per day, 5 days per week. What is the maximum production time per unit in hours required of the line to meet the demand ?
- A manufacturer produces certain items at a labor cost of P 115 each, material cost of P 76 each and variable cost of P 2.32 each. If the item has a unit price of P 600, how many units must be manufactured each month for the manufacturer to break even if the monthly overhead is P428,000 __________?
- 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?
- 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%?
- 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__________?
- 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 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 VOM has a selling price of P 400. If its selling price is expected to decline at a rate of 10% per annum due to obsolescence, what will be its selling price after 5 years ?
- A P 1, 000, 6% bond pays dividend semiannually and will be redeemed at 110% on June 21, 204. It is bought on June 21, 2001 to yield 4% interest. Find the price of the bond ?
- A P 1,000,000 issue of 3%, 15-year bond was sold at 95%. What is the rate of interest of this investment ?
- Miss Calledo deposited P 1,000, P 1,500 and P 2,000 at the end of the 2nd year, 3rd year and 4th year, respectively in a savings account which earned 10% per annum. How much is in the account at the end of the 4th year ?
- A young engineer borrowed P 10,000 at 12% interest and paid P 2,000 per annum for the last 4 years. What does he have to pay at the end of the fifth year in order to pay off his loan ?
- A person buys a piece of lot for P 100,000 downpayment and 10 deferred semi-annual payments of P 8,000 each, starting three years from now. What is the present value of the investment if the rate of interest is 12% compounded semi-annually ?
- A man loans P 187,400 from a bank with interest at 5% compounded annually. He agrees to pay his obligations by paying 8 equal annual payments, the first being due at the end of 10 years. Find the annual payments ?
- What is the present worth of a year annuity paying P 3,000.00 at the end of each year, with interest at 8% compounded annually ?
- A factory operator bought a diesel generator set for P 10,000.00 and agreed to pay the dealer uniform sum at the end of each year for 5 years at 8% interest compounded annually, that the final payment will cancel the debt for principal and interest. What is the annual payment ?
- What annuity is required over 12 years to equate with a future amount of P 20,000? Assume i= 6% annually ?
- What is the present worth of a P500 annuity starting at the end of the third year and continuing to the end of the fourth year, if the annual interest rate is 10 % ?
- The institute of Electronics and Communications Engineers of the Philippines (IECEP) is planning to put up its own building. Two proposals being considered are below.
- In year zero, you invest P 10,000.00 in a 15% security for 5 years. During that time, the average annual inflation is 6%. How much in terms of year zero pesos will be in the account at maturity ?
- A firm borrows P2,000 for 6 years at 8%. At the end of 6 years, it renews the loan for the amount due plus P2,000 more for 2 years at 8%. What is the lump sum due ?
- What is the present worth of two P 100 payments at the end of the third year and fourth year? The annual interest rate is 8%?
- You borrow P3,500.00 for one year from a friend at an interest rate of 1.5% per month instead of taking a loan from a bank at a rate of 18% per year. How much lesser you will pay by borrowing the money from the bank ?
- A student plans to deposit P1,500 in the bank now and another P3,000 for the next 2 years. If he plans to withdraw P5,000 three years from after his last deposit for the purpose of buying shoes, what will be the amount of money left in the bank after one year of his withdrawal? Effective annual interest rate is 10% ?
- Mandarin Bank advertises 9.5% account that yields 9.84% annually. Find how often the interest is compounded ?
- A sum of P1,000 is invested now and left for eight years, at which time the principal is withdrawn. The interest has accrued is left for another eight years. If the effective annual interest rate is 5%, what will be the withdrawal amount at the end of the 16th year ?
- 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 ?