**Depreciation Calculation Example:**On January 1, 2021, Truesdale, Incorporated, 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.Using the double-declining balance method, depreciation for 2021 is approximately:- ○ $10,000- ○ $11,000- ○ $20,000- ○ $22,000**Explanation:** In the double-declining balance method, depreciation is calculated by taking twice the straight-line depreciation rate and applying it to the book value of the asset at the beginning of the year. Here, the straight-line rate is 1/3 (33.33%), so the double-declining rate would be 66.67%. However, without further calculation, it's necessary for students to determine the correct approximate depreciation value for 2021.

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Description: **Depreciation Calculation Example:**On January 1, 2021, Truesdale, Incorporated, 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 o

Depreciation: Depreciation means the reduction in the value of an asset over the life of the assets due to wear and tear of the assets. Formula for double decline depreciation rate : Double declining depreciation rate = Straight line depreciation rate x 2 Double declining depreciation rate = Straight line depreciation rate x 2 = (100/3 years) x 2 = 66.6667%Depreciation for year 2021 = Cost of the assets x depreciation rate = $33,000*66.6667% = $22,000 Option #4. $22,000 is the correct answer.

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On January 1, 2021, Truesdale, Incorporated, 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. Using the double-declining balance method, depreciation for 2021 is approximately O $10,000 $11,000 O $20,000 O $22,000

On January 1, 2021, Truesdale, Incorporated, 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. Using the double-declining balance method, depreciation for 2021 is approximately O $10,000 $11,000 O $20,000 O $22,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

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**Depreciation Calculation Example:**

On January 1, 2021, Truesdale, Incorporated, 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.

Using the double-declining balance method, depreciation for 2021 is approximately:

- ○ $10,000
- ○ $11,000
- ○ $20,000
- ○ $22,000

**Explanation:** In the double-declining balance method, depreciation is calculated by taking twice the straight-line depreciation rate and applying it to the book value of the asset at the beginning of the year. Here, the straight-line rate is 1/3 (33.33%), so the double-declining rate would be 66.67%. However, without further calculation, it's necessary for students to determine the correct approximate depreciation value for 2021.

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