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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 depreciation using the double-declining-balance method.

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Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
FindFindarrow_forward

Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 11, Problem 7EA
Textbook Problem
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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 depreciation using the double-declining-balance method.

To determine

Introduction:

Depreciation expense refers to the amount which leads to reduction in an asset beacuse of its use. It is deducted from gross profit.

To calculate:

Depreciation using double-declining balance method.

Explanation of Solution

Calculation of depreciation using double-declining balance method:

Year Working Depreciation Expense ($) Accumulated Depreciation ($) Book Value ($)
1 ($900,000×66.67%1) 600,030 600,030 ($900,000$600,030) 299,970
2 ($299,970×66

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Chapter 11 Solutions

Principles of Accounting Volume 1
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