case-air lines

case-air lines - Business strategy using financial...

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Business strategy using financial statements Depreciation at Delta Air Lines and Singapore Airlines(A) Case Analysis
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Learning Objectives How to understand the component of a depreciation policy--cost, life, residual value, and pattern for reporting depreciation How to do the “compare and contrast” when the two airlines adopt significantly different accounting policy for depreciation of aircraft. How to do analysis in the economic context where each airline operates. Doing analysis should link accounting choices to financial reporting and business strategy.
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Comparison of Depreciation Expense for Delta and Singapore Airlines Assumptions Depreciable Life Annual Depreciation for Aircraft Salvage Value for Expense Per $100 Gross (years) Aircraft(% of cost) Value of Air Craft Singapore Prior to 4/1/89 8 10% $11.25(a) 4/1/89 to date of case 10 20% $8.00(b) Delta Prior to 7/1/86 10 10% $9.00(c) 7/1/86 to 3/31/93 15 10% $6.00(d) 4/1/93 to date of case 20 5% $4.75(e) (a) 100*(1-10%)/8 (b) 100*(1-20%)/10 © 100*(1-10%)/10 (d) 100*(1-10%)/15 (e) 100*(1-5%)/20
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Comparison of Depreciation Expense for Delta and Singapore Airlines(cont.) We can establish a analytic model by calculating the annual depreciation expense for each airline for each $100 in gross value of aircraft. The annual depreciation expense for Delta and
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This note was uploaded on 04/04/2011 for the course ACCT 5010 taught by Professor Fischer during the Spring '11 term at Kean.

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case-air lines - Business strategy using financial...

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