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What effect did the change in estimate referred

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On January 1, 2016, Fábricas de Jalisco (FAJ) bought an electric generator from Cummins for 4.1 million pesos and immediately put it into service. At that time, the company estimated that the generator's useful life and salvage value would be 12 years and 260 thousand pesos, respectively. On January 1, 2019, the company reassessed its depreciation estimates for generator, increasing the useful life by three years and reducing the salvage value to 200 thousand pesos.

Question 1: What effect did the change in estimate referred to above have on 2018 depreciation expense as reported the 2019 annual report. In other words, will Fábricas de Jalisco restate its 2018 depreciation expense when it is reported as a trailing number in 2019 and future years? If so, by how much?

  • Round your answer to the nearest thousand pesos. Answer with a negative integer if the policy change decreased 2018 annual depreciation, with a positive number if it increased 2018 depreciation. Enter zero if there was no change to 2018 depreciation.

Reference no: EM132503308

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