The Peridot Company purchased machinery on January 2, 2019, for $960,000. A five-year life was estimated and no residual value was anticipated. Peridot decided to use the straight-line depreciation method and recorded $192,000 in depreciation in 2019 and 2020. Early in 2021, the company revised the total estimated life of the machinery to eight years. Required: 1. What type of change is this? 2. Is Peridot required to revise prior years' financial statements as a result of the change? 3. Is Peridot required to provide a disclosure note to report the change? 4. Determine depreciation for 2021. X Answer is not complete. 1. Type of change Change in accounting estimate 2. Is Peridot required to revise prior years' financial statements? No 3. Is Peridot required to provide a disclosure note to report the change? New annual depreciation Yes 4.

The Peridot Company purchased machinery on January 2, 2019, for $960,000. A five-year life was estimated and no residual value was anticipated. Peridot decided to use the straight-line depreciation method and recorded $192,000 in depreciation in 2019 and 2020. Early in 2021, the company revised the total estimated life of the machinery to eight years. Required: 1. What type of change is this? 2. Is Peridot required to revise prior years' financial statements as a result of the change? 3. Is Peridot required to provide a disclosure note to report the change? 4. Determine depreciation for 2021. X Answer is not complete. 1. Type of change Change in accounting estimate 2. Is Peridot required to revise prior years' financial statements? No 3. Is Peridot required to provide a disclosure note to report the change? New annual depreciation Yes 4.

Name: The Peridot Company purchased machinery on January 2, 2019, for $960,
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Description: The Peridot Company purchased machinery on January 2, 2019, for $960,000. A five-year life was estimated and no residual valuewas anticipated. Peridot decided to use the straight-line depreciation method and recorded $192,000 in depreciation in 2019

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter8: Operating Assets: Property, Plant, And Equipment, And Intangibles

Section: Chapter Questions

Problem 8.5E: Change in Estimate Assume that Bloomer Company purchased a new machine on January 1, 2016, for...

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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

The Peridot Company purchased machinery on January 2, 2019, for $960,000. A five-year life was estimated and no residual value
was anticipated. Peridot decided to use the straight-line depreciation method and recorded $192,000 in depreciation in 2019 and
2020. Early in 2021, the company revised the total estimated life of the machinery to eight years.
Required:
1. What type of change is this?
2. Is Peridot required to revise prior years' financial statements as a result of the change?
3. Is Peridot required to provide a disclosure note to report the change?
4. Determine depreciation for 2021.
X Answer is not complete.
1.
Type of change
Change in accounting estimate
2.
Is Peridot required to revise prior years' financial statements?
No
3.
Is Peridot required to provide a disclosure note to report the change?
Yes
4.
New annual depreciation

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