By what alternative name is the declining balance depreciation method known ____________________?
Show answer Hide answer
Answer: B. Constant percentage method
Explanation
The declining balance depreciation method applies a fixed depreciation rate each year to the remaining book value, hence it is also called the constant percentage method. The constant percentage is multiplied by the declining book value balance rather than the original asset cost. This terminology highlights that the depreciation percentage remains invariant across all operational years of the asset. Accelerated depreciation methods allocate higher expense deductions during the early operational years of asset lifespans. The constant percentage formula depends on asset cost, estimated salvage value, and total useful life years. Book values decrease rapidly in initial periods and taper off gradually as the asset ages.
Option A uses incorrect terminology since the percentage rate remains constant rather than doubling every period. Option C refers to sinking fund variations incorporating interest accumulation rather than constant rate book value reductions. Option D combines sum-of-year digits concepts with modified depreciation schedules incorrectly.
- Subject
- Engineering
- Category
- Civil Engineering
- Topic
- —
- Difficulty
- medium
Related questions
Q1. A borrower receives P1,340.00 from a bank and agrees to repay P1,500.00 in 9 months. Calculate the associated discount rate, frequently termed the banker's discount ?
Show answer Hide answer
Answer: D. 13.73 %
The banker's discount rate is calculated by dividing total bank discount by the maturity value. Adjusting for the fractional year using a standard three hundred sixty day baseline yields thirteen point seventy three perc...
Q2. A bank advertises a nominal 9.5% account that yields an effective 9.84% annually. How frequently is the interest compounded ?
Show answer Hide answer
Answer: C. Quarterly
The effective annual interest rate formula relates nominal and effective rates via compounding frequency. For a 9.5% nominal rate yielding 9.84% effectively annually, compounding occurs quarterly. Quarterly compounding d...
Q3. What is the common designation for the depletion allowance method of computing natural resource depreciation ___________________?
Show answer Hide answer
Answer: B. Percentage method
The percentage method is widely recognized as the standard depletion allowance approach for natural resources. This method allows a fixed statutory percentage of gross income to be deducted as depletion expense. Matching...
Q4. Salvage value is occasionally referred to by what alternative term _____________________?
Show answer Hide answer
Answer: D. Second-hand value
Salvage value represents the estimated net amount realizable upon disposing of an asset at the end of its useful life, often called second-hand or scrap value. Alternative industrial terminology frequently interchanges s...
Q5. A standard banker's year comprises a total of ________________ days?
Show answer Hide answer
Answer: B. 360
A standard banker's year simplifies simple interest calculations by assuming exactly three hundred sixty days. Dividing the annual rate by this conventional day count makes manual financial computations straightforward....
Q6. What term describes the asset valuation agreed upon between a willing purchaser and a willing vendor when neither party faces transaction pressure __________________?
Show answer Hide answer
Answer: B. Market value
Market value is the agreed valuation between a willing buyer and a willing seller in an open market without undue pressure. Both participating parties act knowledgeably and prudently without suffering from external compu...