Pedro Company has $181,000 of machinery being depreciated over 5 years. There is no estimable residual value after that. After taking 2 years depreciation, Pedro realizes the equipment is clearly going to last another 4 years and the estimated residual value remains unchanged. Required 1: What depreciation expense will Pedro record in year 2 when using the straight line method? $ Required 2: What depreciation expense will Pedro record in year 3 when using the straight line method? $ Required 3: What depreciation expense will Pedro record in year 2 when using the declining balance method? $

Pedro Company has $181,000 of machinery being depreciated over 5 years. There is no estimable residual value after that. After taking 2 years depreciation, Pedro realizes the equipment is clearly going to last another 4 years and the estimated residual value remains unchanged. Required 1: What depreciation expense will Pedro record in year 2 when using the straight line method? $ Required 2: What depreciation expense will Pedro record in year 3 when using the straight line method? $ Required 3: What depreciation expense will Pedro record in year 2 when using the declining balance method? $

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Description: Pedro Company has $181,000 of machinery being depreciated over 5 years. There is no estimable residual value after that. Aftertaking 2 years depreciation, Pedro realizes the equipment is clearly going to last another 4 years and the estimated residu

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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Question

Pedro Company has $181,000 of machinery being depreciated over 5 years. There is no estimable residual value after that. After
taking 2 years depreciation, Pedro realizes the equipment is clearly going to last another 4 years and the estimated residual value
remains unchanged.
Required 1: What depreciation expense will Pedro record in year 2 when using the straight line method? $
Required 2: What depreciation expense will Pedro record in year 3 when using the straight line method? $
Required 3: What depreciation expense will Pedro record in year 2 when using the declining balance method? $
Required 4: What depreciation expense will Pedro record in year 3 when using the declining balance method? $
Required 5: What depreciation expense will Pedro record in year 2 when using the double declining balance method? $
Required 6: What depreciation expense will Pedro record in year 3 when using the double declining balance method? $

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