Depreciation at Delta Air Lines and Singapore Airlines Free Essay, Term Paper and Book Report
Prior to July 1, 1986, substantially all of the Delta Air lines flight equipment was being depreciated on a straight-line basis to residual value (10% of cost) over a 10-year period from dates placed in service (exhibit 4). Consequently, per $100 of gross aircraft value, Delta Air Lines is able to depreciate $90. With a useful life of 10 years, the annual depreciation expense equals $9.
Depreciable value = Acquisition cost residual value
= 100 (100*10%)
= $90
Annual depreciation expense = [100 (100*10%)] / 10 = $9 / year
After July 1, 1986, Delta increased the estimated useful lives of all of its flight equipment from 10 years to 15 years. The company still uses the straight-line method to residual value of 10% of cost. The new method decreases the annual depreciation expense from $9 to $6 per $100 of gross flight equipment. Concretely, Delta Air Lines saved a total of $130 million in depreciation expense for the year 1987. (exhibit 4)
Annual depreciation expense = [100 (100*10%)] / 15 = $6 / year
On April 1, 1993, Delta Air Lines increased the estima......
Word Count: 1615
Page Count: 6.4 (250 words a page / double spaced)
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