Answer:
The book value of the plant asset on the December 31, 2018 is $75,000.
Explanation:
<u>Determine the depreciable cost,</u>
The depreciable cost = Acquisition cost - Salvage value.
The depreciable cost = 125,000 - 30,500.
The depreciable cost = $94,500.
<u>Determine the annual depreciation expense,</u>
The annual depreciation expense = depreciable cost/useful life
The annual depreciation expense = 94,000/5
The annual depreciation expense = $18,900.
<u>Find the % rate of depreciation .</u>
The % rate of depreciation = (18,900/94,500) × 100.
% rate of depreciation = 20%
Since it is the double-declining-balance method of depreciation we multiply the % rate by 2 = 20% × 2 = 40%
<u>Applying the rate to the carrying value of the asset to obtain current year's depreciation expense.</u>
Current year's depreciation expense = Carrying value of the asset × the depreciation rate %.
Current year's depreciation expense = 125,000 × 40%.
Current year's depreciation expense = $75,000
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