Carpio. Cidrence A April 20, 2022) 19 - 09922 ME - 3208 1. What is depreciction in Engineering Economics * In the lesson. depreciation was defined as the decrease in the value of physical property with the paseage of time. Iris the non-cash method vsed to represent the reduction inthe value ‘of an aeset. One example would be in terms of resale value. tris Given that used appliances would be selling at a lower price compared! to the price it was bought brand new. His becouse the physical troits, Of said appliance would decrease upon usage and ge it ages, thus having alow resale price. 2. What are the types of depreciation ? There ate two tyoes of depreciation listed in the leseon—(1) the Physical depreciation, and (2) the functional depreciation. The, physical depreciation refers to the decrease in value due to the reduction of the Physical ability of an equipment or asset to produce results. Thié would be Opplicable to those used appliances , with some defects, that are being sold . On the other hand, functional depreciation isthe value drop caused by the. lessening of the demands tor the Function that the property was designed fo render. Thies could be seen with the sale price difference between the fully furnished house and those that aren't. 2. What are the purpose of depreciation ? The purpose of depreciation was itemized into four points. Depre - -Gotion is considered in economics as (1) it enables the costs contibutel Dy did depreciation to be included a2 a cost in the production of goods and services. Knowing the annual cost of depreciation (2) allowed it to be put up in afund . called depreciation reserve . for replacement of the aseet. Working aroud depreciation aleo Co) presents the person with the chance ‘to recover the capital invested in the assot. Alongeide this, the inclusion of depreciation (4) grants the opportunity to be able to provide additional capital. termed deprecation reserve, beforehand.4, Nhat ore the properties of a depreciable asset ? The properties of a depreciable asset are as follows: 1) It must have a determinable life and the life must be greater thay | year. (2) HF must be something used in business or held to produce income. (a) Ht must be someting that gets used up, wears out, decays, become} obsolete of loses its value due to natural couses- 4) tt must not be an inventory stock in trade or investment property. 3. What ie Book Value ? Book value is described as the worth of property or an asset as shown. onthe accounting records of the company: Ht Was added thet is the cost of the property less all tts debts and elated circumstances. ©. What is Salvage Value ? Salvage value is defined as the amount that will be paid by a willing buyer 40 a willing seller for a property after depreciation ie completed. It Would be the resale value of ‘the asset at the end of its useful life. 1. What are the methods for finding depreciation ? The methods of depreciation cahng in the given lesson are as follows. G11 Straight Line Method CLM) (2) Sinking Fund Method (SFM) (3) Declining Balance Method (DBM) (4) Double Declining Bolance Method CDDBM) (9) Sum of the Year Digit Method CS0¥DM ) (e) Service - Output Method (90M) 8. What is Depletion ? Depletion ie the mothod generally applied in the cose of wasting assets Teterred to de Natural resources such as mines, quarries, and the similar. Wig the allocation of the coet of extraction used for energy and natural ~ fesource firms. It is also the non-cash expense tMat lowers the cost value of an asset, ond ie limited to those rotural resources utilized.9. What is Copital Financing ? Just a6 it 16 called, capital financing is the provision of capital to be used tor business. His the money given to businesses by lenders ond equity holders to cover the cost of operations. As euch , capital funding | usually consists of both debts , presented as bonde, and equity, which Would be in stock form. to. Nhat ore the three types of Business Organization ? Explain each. The three types of business orgarization discussed in the lesson are as followe (1) \ndividual Ownership — In this type, the one who establiches the, business uses hie or her own copital. making them the sole owner Of the bueiness they etarted- (2) The Partnership — \Nith this type, the business ie etarted by the, | association of two or more persons, and they actively work together to start and run sdid business . (2) The Corporation — Corporation is defined with the lesson as a distinct legal antity that ie separote from the individuals whoown it. A corporation can engage in almost any type ot business transaction in which a real percon could occupy himself or herself.