Question

In _____________ method, the depreciation of properties assumed to be equal to the annual sinking fund plus the interest on the fund for that year.

(a) Sinking fund

(b) Annual fund

(c) Constant percentage

(d) Straight line

This question was addressed to me during a job interview.

The origin of the question is Operating Cost of Equipment in portion Construction Equipments of Construction & Building Materials

Answer 1

The correct option is (a) Sinking fund

For explanation I would say: The amount of the annual installment of the sinking fund may be found out by the sinking fund formula where S represents amount of sinking fund and i represent the rate of interest expressed in decimal for example 3 %.