The Peridot Company purchased machinery on January 2, 2019, for
$800,000. A five-year life was estimated and no residual value was
anticipated. Peridot decided to use the straight-line depreciation
method and recorded $160,000 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.
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