Information as to why its estimates were so substantially

Assignment Help Managerial Accounting

Reference no: EM13915782

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: EM13915782

Questions Cloud

Write a brief summary of the given short clip for discussion : Write a brief summary of the short clips for discussion in class. With your peers discuss whether the bad habits the YouTube videos parody correspond with design principles introduced in this chapter.

Variety of employment positions : A lack of willingness to accept a variety of employment positions is a common career planning mistake associated with weak:

Margin and operating expenses : A company has net sales of $861,000 and cost of goods sold of $571,000. Its net income is $102,900. The company's gross margin and operating expenses, respectively, are:

Prepare the stockholders equity section : Quality Corporation reports the following information in its January 1, 2013, balance sheet:Stock holders equity

Information as to why its estimates were so substantially : 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 ..

Two production departments : Dean Corporation has two service departments, Power and Maintenance, and two production departments, Painting and Polishing. The following data have been estimated for next year's operations:

Prepare a slideshow that would satisfy kawasaki : Dust off that start-up fantasy you may have, and get to work. Prepare a slideshow that would satisfy Kawasaki's 10/20/30 rule:

Paid the annual cash dividend to preferred shareholders : Concord Corp. completed the following transactions in 2013, the first year of operation:

Closing entries for the capital projects fund : You are a Hometown accountant. The Capital Project Fund has just been created to account for resources received and expended for the construction of a new Health Center.

User Account

All Pages