Using the double-declining-balance method, the book value of the machine is approximately $3,667.
<h3>
What Is the Double-Declining Balance (DDB) Depreciation Method?</h3>
The double-declining balance depreciation (DDB) method, also known as the reducing balance method, is one of two common methods a business uses to account for the expense of a long-lived asset.
The double-declining balance depreciation method is an accelerated depreciation method that counts as an expense more rapidly (when compared to straight-line depreciation that uses the same amount of depreciation each year over an asset's useful life).
Similarly, compared to the standard declining balance method, the double-declining method depreciates assets twice as quickly.
<u>Solution-</u>
Straight-line rate = 100%÷ useful life of 3 years = 1/3
Double-declining rate = Straight-line rate of 1/3 x 2 = 2/3
2021 Depreciation = Starting book value of $33,000 (or cost of $33,000) x rate of 2/3 = $22,000
Book value at 12/31/21 = Cost of $33,000 - Accumulated depreciation of $22,000 = $11,000
2023 Depreciation = Book value at 12/31/22 of $11,000 x rate of 2/3 = $7,333
Book value at 12/31/23 = (Cost of $33,000 - Accumulated depreciation of $29,733 (or $22,000 + $7,333) = $3,667
Your question is incomplete, but most probably your full question was:
On January 1, 2022, Truesdale, Inc., purchased a piece of machinery for use in operations. The total acquisition cost was $33,000. The machine has an estimated useful life of 3 years and a salvage value of $3,000. At December 31, 2023, using the double-declining-balance method, the book value of the machine is approximately _____.
a. $3,667
b. $2,445
c. $3,000
d. $667
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