Answer:
$43,200
Step-by-step explanation:
Data provided in the question:
Cost of the asset = $80,000
Useful life of the machine = 5 years
Salvage value at the end of useful life = $20,000
Now,
Using the double declining method of depreciation
Annual depreciation rate = 2 × [1 ÷ useful life ]
= 2 × [ 1 ÷ 5 ]
= 2 × 0.2
= 0.4 or 40%
thus,
The depreciation from October 1, 2014 to December 31, 2014
= Annual Depreciation rate × duration × Book value for 2014
= 0.4 × 3 months × $80,000
= 0.4 × 0.25 year × $80,000
= $8,000
Book value for 2015
= Cost - depreciation till December 31, 2014
= $80,000 - $8,000
= $72,000
Therefore,
Depreciation for the year 2015
= Annual Depreciation rate × Book value for 2015
= 0.4 × $72,000
= $28,800
Therefore,
the book value of the plant asset on the December 31, 2015
= Book value for 2015 - Depreciation for the year 2015
= $72,000 - $28,800
= $43,200
