The board of directors of Ameritech Satellite Technology is having its regular quarterly meeting. Accounting policies are on the agenda, and depreciation is being discussed. A new board member, an attorney, has some strong opinions about two aspects of depreciation policy. Clay Fitzhugh argues that depreciation must be coupled with a fund to replace company assets. Otherwise, there is no substance to depreciation, he argues. Fitzhugh also challenges the three-year depreciable life of company computers. He states that the computers will last much longer and should be depreciated over at least five years. Required Write a memo to explain the concept of depreciation to Fitzhugh and to answer his arguments. Format your memo as follows:

MEMO To: From: Subject: