Case Solution

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Case Study

Depreciation at Delta Singapore Airlines.

Submission Date

16-Sep-2009

Class

EPGP± 09-10

Subject c c Submitted by

Financial Reporting and Analysis

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Case Question 1c

Calculate the annual depreciation expense that Delta and Singapore would record for each $100 gross value of aircraft. c cccccccccccccccccccccc„ c4cccc5ucc&cc06ccc7cccucc ccc c c c Fixed Asset Price $100 c Delta Airlines c c   ccc .cc u c +c ((!c 8c + ()#c 8c + ()#cc . c ½ 
! +c ((!c c0c 9:c 9:c %:c ucc 9c %c 9c Depreciation $9 $6 $4.75

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Singapore Airlines c   ccc u cc u c +c ()(c u c +cc ()(c 9:c 9:c )c 9c $11.25 $8

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Are the differences in the ways that two airlines account for depreciation expense significant? c 
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Why would the companies depreciate aircraft using different depreciable lives and salvage values? What reasons could be given to support their differences? c 0 c  c
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Is the different treatment proper? ;+ccc'