DE LA SALLE UNIVERSITY – DASMARIŇAS

Dasmariñas, Cavite
COLLEGE OF ENGINEERING, ARCHITECTURE AND TECHNOLOGY
ENGINEERING

SUBJECT: ENGINEERING ECONOMY SEMESTER/ SY: 2nd /2017-18 DATE: March 30, 2019
COURSE CODE: MEET 429 TERM/ PERIOD: MIDTERM LONG ROOM: CIH319
NAME: __________________________________________________

1. Depreciation __________ the company’s after tax cash flow, because depreciation reduces the amount of
income taxes a company must pay.
a) Decreases b) Reduces c) Increases d) Diminishes
Select the correct answer as follows:
a) Appraisal Value b) Book Value c) Property Value d) Market Value
2. ___________ is established on the basis of accepted accounting procedures.
3. __________ is the amount that could be received if the asset is offered for sale on the open market.
Select the correct answer as follows:
a) Percentage Depletion b) Cost Depletion c) MACRS d) DDB
4. What is a special consideration given for natural resources? _______
5. What is based on the level of activity or usage? _________
6. What is the required tax depreciation method for all depreciable assets? ______
7. What is the maximum annual depreciation rate for the DB method that is twice the SL method? _____
A machine which cost Php 200,000 is acquired on October 1, 2017. It’s estimated salvage value is Php 20,000 and
its expected life is eight years. Calculate the depreciation expense for 2017 and 2018 by each of the following
methods:
8. Straight-Line Method;
Double-Declining Balance
A machine cost Php 500,000 on April 1, 2017. Its estimated salvage value is Php 50,000 and the expected life is
eight years. Calculate the depreciation expense by each of the following methods showing the figures.
10. Straight Line Method for 2017 ;
11. Double-Declining Balance for 2018
Chart A has the following equipment:
Equipment 1 Equipment 2
Purchase date January 1, 2016 September 1, 2016
Cost Php72,000 Php84,000
Salvage value Php7,200 Php8,400
Amount to be depreciated Php64,800 Php75,600
Years of useful life 5 5

12-13 If Chart A used the Straight-Line Method, what is the amount of Depreciation for each year? Using the
Chart format below fill-in the data.
Years
Number of
Salvage of Annual Depreciation Accumulated
Cost months for
value useful depreciation expense depreciation
depreciation
life
Equipment 1
2016
2017
2018
2019
 2020

Equipment 2
2016
2017
2018
2019
2020
2021

14-15 If Chart A above used the Double-Declining Method, what is the amount of Depreciation for each year?
Using the Chart format below fill-in the data.
Beginning Number of Ending
Depreciation Depreciation Accumulated
Cost book months for book
rate expense depreciation
value depreciation value
Equipment 1
2016
2017
2018
2019
2020

Equipment 2
2016
2017
2018
2019
2020
2021

16-17 On September 1, 2016, Company M purchased a building at Php12,000,000. Buildings are depreciated
using the straight-line depreciation method. Useful life of the building is 40 years. Salvage value of the
building at the end of useful life is estimated as Php1,200,000. A) What is the amount of depreciation
expense for 2016? B) What is the book value of the building at December 31, 2016?
18-19 On January 1, 2017, Company G purchased equipment at Php800,000. Residual value (salvage value) at
the end of useful life is estimated as Php80,000. The equipment was designed and manufactured to
be used for 20,000 hours in production. In 2017, Company G used this equipment of 5,000 hours in
production. What is the depreciation expense for 2017?
20-21 A piece of manufacturing equipment was purchased for Php 75,000.00 shipping and installation costs
amounted to Php 15,000.00. It is estimated that this machine will have a salvage value of Php 10,000
when replaced after 25,000 hours of use. find out a) the depreciation rate per hour; b) the book value
after 15,000 hours of operation.
22-23 A new rock aggregate crusher machine is expected to produced 6M cubic meters of mixed sized
aggregates over a period of 5 years. If the new machine had produced 800,000 cu. mtrs for year 1, find
out the depreciation for year 1 using the UOP method. The cost of the new machine is Php 2.5 M with
10% of the First cost as the Salvage Value.
24-25 What is the allowable depletion charge using the cost depletion method for year 1 only of
the limestone mine investment described as: Cost to acquire mine rights = Php3,000,000;
Estimated mine size = 2,000,000 pounds, and the Amount sold in year 1 = 700,000 pounds.