Alfredo Company purchased a new 3-D printer for $900,000. Although this printer is expected tolast for ten years, Alfredo knows the technology will become old quickly, and so they plan to replace thisprinter in three years. At that point, Alfredo believes it will be able to sell the printer for $15,000. Calculateyearly depreciation using the double-declining-balance method
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.
Alfredo Company purchased a new 3-D printer for $900,000. Although this printer is expected to
last for ten years, Alfredo knows the technology will become old quickly, and so they plan to replace this
printer in three years. At that point, Alfredo believes it will be able to sell the printer for $15,000. Calculate
yearly
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