Different assumptions resulted in different operating result

Reference no: EM13787294

Airline X depreciates its airplanes over a 15-year period and estimates a salvage value of 10% of the cost of the plane. At the same time, Airline Y depreciates identical airplanes over a 25-year period and estimates a salvage value of 15% of the cost of the plane. As expected, these different assumptions resulted in different operating results. For example, if an airplane costs $ 10 million, Airline X will depreciate $ 260,000 more per year for 15 years than Airline Y.

Which company's estimate of useful life more closely reflects reality? Will you feel comfortable as a passenger in a 25-year old airplane? Does the fact that Airline Y subsequently went out of business provide any information as to why its estimates were so substantially different from those of financially sound Airline X?

Reference no: EM13787294

Questions Cloud

The long-standing position of most state courts : The long-standing position of most state courts in the US has been that students are barred from bringing legal claims against teachers and schools for their "educational malpractice", "educational negligence" or "failure to educate" with respect to ..

Psychologists roles-the law-and juries : Explain how each ethical obligation is overcome and/or mitigated by psychologists by providing specific examples of policies, programs, laws, or regulations that are in place in each area of focus.

Frank loses his footing, slips off the saw : Cutter Company makes and sells table saws, which are designed to be safe if used properly. Erin buys a Cutter saw and lends it to her neighbor Frank. To reach a toolbox on a high shelf in his garage, Frank props the saw at an angle against a cabinet ..

Discuss fully the ethical issues related to this case : For this assignment, you will consider the consequences of acting ethically or unethically. After carefully reading the supplemental ethics materials (Jennings Ethics Handout), discuss fully the ethical issues related to this case

Different assumptions resulted in different operating result : As expected, these different assumptions resulted in different operating results. For example, if an airplane costs $ 10 million, Airline X will depreciate $ 260,000 more per year for 15 years than Airline Y.

What literary devices does the author use to create meaning : What literary devices does the author use to create meaning: figures of speech, symbolism, allusion, sensory description, etc.? What issues or themes seem the most important, and what details support them?

Summarize the preceding transactions : Summarize the preceding transactions as they affect the accounting equation. Identify each transaction with the date.

Edward hanousek worked for pacific and arctic railway : Edward Hanousek worked for Pacific and Arctic Railway and Navigation Company (P&A) as a roadmaster of the White Pass & Yukon Railroad in Alaska. Hanousek was responsible "for every detail of the safe and efficient maintenance and construction of trac..

Production planning and quality management issues : Explain the technique you identify, and give an example of how it is used in the manufacturing, retail, and health care industries.

User Account

All Pages