Functional depreciation of an equipment is the measure of decrease in its value

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Question
Functional depreciation of an equipment is the measure of decrease in its value due to its
Options
A. ageing
B. wear and tear
C. obsolescence
D. breakdown or accident

Correct Answer

obsolescence

Chemical Engineering Plant Economics problems

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3. Chemical engineering plant cost index is used for finding the present cost of a particular chemical plant, if the cost of similar plant at some time in the past is known.
The present cost of the plant = original cost x
The most major component of this cost index is
Options
A. fabricated equipment and machinery.
B. process instruments and control.
C. pumps and compressor.
D. electrical equipments and material.

6. 'Lang factor' is defined as the ratio of the capital investment to the delivered cost of major equipments. The value of 'Lang factor' for fixed capital investment, for a solid-fluid processing chemical plant ranges from
Options
A. 1.2 to 1.4
B. 2.5 to 2.7
C. 4.2 to 4.4
D. 6.2 to 6.4

7. Pick out the correct statement.
Options
A. Difference between income and expense is termed as gross revenue.
B. Unamortised cost is the difference between the original cost of a property and all the depreciation charges made to date.
C. Sum-of-the-years-digits methods of depreciation calculation accounts for the interest on the investment.
D. Scrap value is the net amount of money obtainable from the sale of used property over and above any charges involved in its removal & sale.

8. Depreciation
Options
A. costs (on annual basis) are constant when the straight line method is used for its determination.
B. is the unavoidable loss in the value of the plant, equipment and materials with lapse in time.
C. does figure in the calculation of income tax liability on cash flows from an investment.
D. all (a), (b) and (c).

9. Which of the following methods of depreciation calculations results in book values greater than those obtained with straight line method?
Options
A. Multiple straight line method
B. Sinking fund method
C. Declining balance method
D. Sum of the years digit method

10. Which of the following is not a component of the working capital for a chemical process plant?
Options
A. Product inventory.
B. In-process inventory.
C. Minimum cash reserve.
D. Storage facilities.

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