**Depreciation Calculation for Alfredo Company's 3-D Printer**Alfredo Company purchased a new 3-D printer for $63,000. Although this printer is expected to last for ten years, Alfredo knows the technology will become outdated quickly, so they plan to replace this printer in three years. At that point, Alfredo believes they will be able to sell the printer for $17,000. Calculate depreciation using the straight-line method.__$___**Explanation:**- **Straight-Line Depreciation Method**: This method spreads the cost of an asset evenly over its useful life. The formula for straight-line depreciation is: \[ \text{Depreciation Expense} = \frac{\text{Cost of Asset} - \text{Salvage Value}}{\text{Useful Life}} \]- **Calculation Details**: - **Cost of Asset**: $63,000 - **Salvage Value**: $17,000 - **Useful Life**: 3 years (based on replacement plans)Substitute these values into the formula to find the annual depreciation expense.

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Description: **Depreciation Calculation for Alfredo Company's 3-D Printer**Alfredo Company purchased a new 3-D printer for $63,000. Although this printer is expected to last for ten years, Alfredo knows the technology will become outdated quickly, so they plan t

Depreciation expenses are used to reduce the value of fixed assets. It can be calculated by using…

Business

Accounting

Alfredo Company purchased a new 3-D printer for $863,000. 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 $17,000. Calculate depreciation using the straight-line method.

Alfredo Company purchased a new 3-D printer for $863,000. 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 $17,000. Calculate depreciation using the straight-line method.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

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.

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**Depreciation Calculation for Alfredo Company's 3-D Printer**

Alfredo Company purchased a new 3-D printer for $63,000. Although this printer is expected to last for ten years, Alfredo knows the technology will become outdated quickly, so they plan to replace this printer in three years. At that point, Alfredo believes they will be able to sell the printer for $17,000. Calculate depreciation using the straight-line method.

__$___

**Explanation:**

- **Straight-Line Depreciation Method**: This method spreads the cost of an asset evenly over its useful life. The formula for straight-line depreciation is:

\[
\text{Depreciation Expense} = \frac{\text{Cost of Asset} - \text{Salvage Value}}{\text{Useful Life}}
\]

- **Calculation Details**:

- **Cost of Asset**: $63,000
- **Salvage Value**: $17,000
- **Useful Life**: 3 years (based on replacement plans)

Substitute these values into the formula to find the annual depreciation expense.

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