A plant asset cost ₤256,000 and is estimated to have a ₤32,000 residual value at the end of its 8-year useful life. The annual depreciation expense recorded for the third year using the double-declining-balance method would be

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The double-declining-balance method calculates depreciation by doubling the straight-line rate. The straight-line rate is 1/8 = 12.5%, so double is 25%. Year 1 depreciation: ₤256,000 * 25% = ₤64,000. Year 2 depreciation: (₤256,000 - ₤64,000) * 25% = ₤48,000. Year 3 depreciation: (₤256,000 - ₤64,000 - ₤48,000) * 25% = ₤36,000.

A Plant Asset Cost ₤256,000 and Is Estimated to Have