The depletion allowance method of computing depletion is commonly known as ______. A. Unit method B. Percentage method C. Factor method D. Sinking fund method

The correct answer is: A. Unit method.

The unit method is a method of computing depletion that allows taxpayers to deduct a certain amount for each unit of mineral extracted. The amount of the deduction is based on the cost of the mineral deposit, the estimated number of units that can be extracted, and the current market value of the mineral.

The percentage method is a method of computing depletion that allows taxpayers to deduct a percentage of the gross income from the mineral property. The percentage is based on the estimated percentage of the mineral that has been extracted.

The factor method is a method of computing depletion that allows taxpayers to deduct a factor that is based on the estimated percentage of the mineral that has been extracted and the current market value of the mineral.

The sinking fund method is a method of computing depletion that allows taxpayers to set aside a certain amount of money each year to replace the mineral that has been extracted. The amount of the deduction is based on the cost of the mineral deposit, the estimated number of units that can be extracted, and the current market value of the mineral.

The unit method is the most common method of computing depletion. It is a simple and straightforward method that is easy to understand and apply. The percentage method is a more complex method that is based on the estimated percentage of the mineral that has been extracted. The factor method is a more complex method that is based on the estimated percentage of the mineral that has been extracted and the current market value of the mineral. The sinking fund method is a more complex method that requires taxpayers to set aside a certain amount of money each year to replace the mineral that has been extracted.