Name :_______________________________

Course/Yr :_______________________________
Date :_______________________________

Time/Days :_______________________________
Score
College of Business & Accountancy

Quiz in MATH 3 – Chapters 7 & 8 Exequiel C. Cruspero, Jr., MBA, CPA

Test I. IDENTIFICATION. Give the term being referred upon by each of the following questions. Write your answer on
the space provided. NO ERASURES (white ink alteration, superimposition etc) ARE ALLOWED.

_____________________1) Under this depreciation method, the yearly charge for depreciation declines steadily over
the estimated useful life of the asset. SYD
_____________________2) The depreciation method that recognizes equal periodic depreciation charges for each
year of an asset's life. Straight-line depreciation
_____________________3) Estimated amount that can be realized upon the retirement of an asset. Residual value
_____________________4) Computed by subtracting residual value from total cost of the asset. Book value
_____________________5) The depreciation rate on the 7 th year for an asset having a useful life of 15 years is
_______ ? 9/120
_____________________6-7) Two common applications of annuities.
_____________________7)
_____________________8) Used to accumulate money for purposes such as acquiring a new equipment.
_____________________9) TRUE or FALSE: In the sum-of-the-years'-digits method, residual value is not used in the
computations of depreciation expense.
_____________________10) In this situation, the future value of an annuity is known.

Test II. PROBLEMS. Give what is/are required by each problem. Write your final answers on the space provided. NO
SOLUTIONS, NO CREDIT.

A. On January 1, 2010, Carson Company purchased equipment at a cost of P420,000. The equipment was estimated to
have a useful life of five years and a salvage value of P60,000. Carson uses the sum-of-the-years'-digits method of
depreciation. What should the accumulated depreciation be at December 31, 2013?

1) Answer: _________________ /P336,000

B. A used machine was by Loctite Company for P77,000, requiring an overhaul costing P8,000, installation costs of
P5,000, and special acquisition fees of P2,000. What is the cost of the used machine?

2) Answer: _________________ /P92,000

C. A computer equipment was acquired on July 1, 2010 of the year at a cost of P56,000 that has an estimated residual
value of P6,000 and an estimated useful life of 5 years. Determine the depreciation in 2010 using straight-line method.

3) Answer: _________________ /P5,000

D. What sinking fund payment is required at the end of each month, at 18% interest compounded monthly, to amount
to P400,000 in 6 years?

4) Answer: _________________

E. Metro Bank is offering mortgages at 9% interest. What monthly payments would be required to amortize a loan of
P2,000,000 for 15 years?

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Test III. SCHEDULE CONSTRUCTION.

1) Equipment costing P110,000 with a useful life of 5 years and a residual value of P10,000 is depreciated by the
straight-line method.

End of Year Annual Accumulated Book Value

Depreciation Depreciation
(new)
1
2
3
4
5

2) Giardini Del Sole purchased a new production-line machinery for P445,000. The company expects this machinery to
last six years and have a trade-in value of P25,000. Using the SYD method, prepare a depreciation schedule.

End of Total Depreciation Rate Fraction Annual Accumulated Book Value

Year Depreciation Depreciation
(new)
1
2
3
4
5
6

3) A debt of P40,000 is to be amortized with P8,000 being paid at the end of each quarter. The interest rate is 16%
compounded quarterly. Construct an amortization schedule.

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