Question

The method is especially suited to natural resources (mines, quarries, sand, pits etc.) is said to be____________.
A) Annuity method
B) Depletion method
C) Revaluation method
D) Sum of digits method

Answer 1

Hint:
1. Annuity method: It is the method that predicts the sum spent on buying an asset is an investment that should be expected to yield interest.
2. Depletion method: It is defined as the reduction of a natural resource or asset thus is used to depreciate assets that are natural resources.
3. Revaluation method: It is the method of depreciation of natural resources that are used for the calculation of depreciation of trivial, inexpensive, and small fixed assets that are normally accounted for as a collective unit.
4. Sum of digits method: It is the method of the algebraic sum.

Complete step by step solution:
Natural resources are materials provided by the Earth that humans can use to make artificial products for better uses. Humans cannot make natural resources.
We use and modify natural resources in ways by adding substances or chemicals that are beneficial to us. The materials used in human-made artificial objects are natural resources.
Resource extraction is a process that involves withdrawing materials from the natural environment by different mining processes.

The exploitation of natural resources is defined as the purpose of using natural resources for the economic growth of the country.
Sometimes exploitation of natural resources causes the adverse effect of environmental degradation.

Hence the correct option is $\left( {\text{B}} \right)$.

Note: Depletion method has started to emerge on an industrial scale and processing of raw materials. In extraction and mining processing industries, entities have fixed assets, mines, quarries, and wells to extract natural resources like coal, oil, timber, metal, salt, etc. Unlike property, plant, and equipment that are used during the period, these assets get consumed as a result of extraction and gradually decreasing in quantity. For such assets, depreciation is calculated by using the depletion method.