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On October 1, 2013, Holt Company places a new asset into service. The cost of the asset is $80,000 with an estimated 5-year life and $20,000 salvage value at the end of its useful life. What is the book value of the plant asset on the December 31, 2013, balance sheet assuming that Holt Company uses the straight-line method of depreciation?.

Respuesta :

Answer:

$77,000

Explanation:

On October 1, 2013

cost of the asset = $80,000

Salvage value = $20,000

Useful life = 5 years

Annual depreciation = (80000 - 20000)/5

                                  = $12,000

Accumulated Depreciation between October 1, 2013 and December 31, 2013 using the straight-line method of depreciation

= $12000 × 3/12

= $3,000

Book value of the asset on December 31, 2013

= $80000 - $3000

= $77,000

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