The Units-Of-Production Method Is Commonly Used to Calculate the Amount

question 5

Multiple Choice

The units-of-production method is commonly used to calculate the amount of depreciation and amortisation expense to be written-off each year from the accumulated costs of exploration and development of a mining venture.Which of the following formulae best expresses the calculation of the amortisation rate under this method?

• A)
• \[\begin{array}{l}
• \begin{array} { c }
• \text { Accumulated } \\
• \text { Cost }
• \end{array} + \begin{array} { c }
• \text { Estimated } \\
• \text { Future Costs }
• \end{array} - \begin{array} { c }
• \text { Estimated } \\
• \text { Residual Value }
• \end{array}\\
• \hline\text { Economically Recoverable Reserves }
• \end{array}\]
• B)
• \[\begin{array}{l}
• \begin{array} { c }
• \text { Accumulated } \\
• \text { Cost }
• \end{array} + \begin{array} { c }
• \text { Estimated } \\
• \text { Future Costs }
• \end{array} - \begin{array} { c }
• \text { Estimated } \\
• \text { Residual Value }
• \end{array}\\
• \hline\text { Economically Market Value of the Venture }
• \end{array}\]
• C)
• \[\begin{array}{l}
• \begin{array} { c }
• \text { Accumulated } \\
• \text { Cost }
• \end{array} + \begin{array} { c }
• \text { Estimated } \\
• \text { Future Costs }
• \end{array} - \begin{array} { c }
• \text { Estimated } \\
• \text { Residual Value }
• \end{array}\\
• \hline\text { Present Value of Estimated Future Net Revenue }
• \end{array}\]
• D)
• \[\begin{array}{l}
• \begin{array} { c }
• \text { Accumulated } \\
• \text { Cost }
• \end{array} + \begin{array} { c }
• \text { Estimated } \\
• \text { Future Costs }
• \end{array} - \begin{array} { c }
• \text { Estimated } \\
• \text { Residual Value }
• \end{array}\\
• \hline\text { Estimated Future Net Revenue }
• \end{array}\]

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Definitions:

Excavating Coal Mines

Excavating Coal Mines involves the extraction of coal from the ground, using various techniques like surface mining and underground mining, to meet energy production needs.

Adjacent Land

Refers to parcels of land or property that share a common border or are in close proximity to each other.

Resale Price Maintenance

A practice whereby manufacturers and distributors agree on the minimum prices at which retailers can sell their products.

Economists

Experts who focus on how goods and services are created, distributed, and used by individuals.