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Accounting For Airliner Depreciation  
User currently offlinefaro From Egypt, joined Aug 2007, 1534 posts, RR: 0
Posted (4 years 5 months 5 days 10 hours ago) and read 2427 times:

Do airlines apply different rates of depreciation to different components of acquired aircraft (engines, avionics, software, etc) or just one unified rate for the whole thing. Conceivably, components have different useful lives which should be reflected in their rate of depreciation.

Faro


The chalice not my son
5 replies: All unread, jump to last
 
User currently offlineflipdewaf From United Kingdom, joined Jul 2006, 1562 posts, RR: 1
Reply 1, posted (4 years 5 months 5 days 10 hours ago) and read 2414 times:
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I'm not sure if this is exactly how the airlines do it but when we did it at uni we just depreciated the aircraft over 14 years I think and if anything had a life of less than that it was calculated under scheduled maintenance costs. I'm not sure this is how its done in the real world though.

Fred


User currently offlinesteve6666 From United Kingdom, joined Sep 2003, 400 posts, RR: 0
Reply 2, posted (4 years 5 months 5 days ago) and read 2355 times:

Read the Accounting Policies note to a set of published accounts for a listed airline.

Different GAAPs will result in different treatments - I believe IFRS permits capitalisation of individual items, but not sure how much more granularity airlines typically go beyond airframe and engines.

Quoting faro (Thread starter):
Conceivably, components have different useful lives which should be reflected in their rate of depreciation.

Not really, that's why you expense maintenance that brings the capital item back up to its original condition.



eu nasci ha dez mil anos atras, e nao tem nada nesse mundo que eu nao saiba demais
User currently offlinem11stephen From United States of America, joined Aug 2008, 1247 posts, RR: 1
Reply 3, posted (4 years 5 months 4 days ago) and read 2243 times:

A big off topic here but I thought I'd share. I assume we're all familiar with the crash of AA191. Its turn out that due to inflation the DC-10 was worth 50 million dollars when it crashed however AA only payed 25 million for it when they originally purchased it. So technically AA initially made 25 million off of the crash of flight 191. I'm sure that all the wrongful death lawsuits quickly ate through that 25 million however.


My opinions, statements, etc. are my own and do not have any association with those of any employer.
User currently offlineBraniff747SP From United States of America, joined Oct 2008, 2967 posts, RR: 1
Reply 4, posted (4 years 5 months 3 days 22 hours ago) and read 2216 times:

Quoting m11stephen (Reply 3):
I'm sure that all the wrongful death lawsuits quickly ate through that 25 million however.

Doesn't the insurance pay for that? or it's AA?



The 747 will always be the TRUE queen of the skies!
User currently offlinem11stephen From United States of America, joined Aug 2008, 1247 posts, RR: 1
Reply 5, posted (4 years 5 months 3 days 20 hours ago) and read 2197 times:

Quoting Braniff747SP (Reply 4):
Doesn't the insurance pay for that? or it's AA?

I thought it was AA but I could be wrong. Like your car insurance policy any airline liability policy has a policy limit and I'm guessing close to 300 wrongful death lawsuits would have burned through that quickly. I should point out that I'm not entirely sure.  



My opinions, statements, etc. are my own and do not have any association with those of any employer.
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