The calculation for annual depreciation using the units-of-production method is (initial cost/estimated output) * the actual yearly output (depreciable cost/yearly output) * estimated output depreciable cost/yearly output (depreciable cost/estimated output)* the actual yearly output Depletion: Is the process of allocating the cost of natural resources to periods in which they are consumed. Is also called depreciation. Is also called amortization. Is an unrealized expense reported in equity. Is the process of allocating the cost of intangibles to periods in which they are used. Secured bonds: Are also referred to as debentures. Have specific assets of the issuing company pledged as collateral. Are backed by the issuer's bank. Are subordinated to those of other unsecured liabilities. Are the same as sinking fund bonds. The contract between the issuer and the bondholders, which identifies the rights and obligations of the parties, is called a(n): Debenture Bond indenture Mortgage Installment note Mortgage contract When a bond sells at a premium: The contract rate is above the market rate. The contract rate is equal to the market rate. The contract rate is below the market rate. It means that the bond is a zero coupon bond. The bond pays no interest. Part II. Financial Statements: Match the following characteristics with the financial statement it describes it. Each may be used more than once. Income Statement Balance Sheet Statement of Retained Earnings Reports as of a specific date The first statement prepared Reports only revenues and expenses A formal presentation of the accounting equation The connecting link between the income statement and balance sheet