bobcat
Posts: 1141
Joined: Thu Jun 28, 2007 2:28 pm

Who's Keeping An Eye On U.S. Airlines' Accounting?

Thu Jun 27, 2002 1:06 am

With so much fraud, deception, ignorance, etc... going on
in corporate American today, who's keeping an eye on U.S. airline industry's accounting practices?

 
broke
Posts: 1299
Joined: Wed Apr 24, 2002 8:04 pm

RE: Who's Keeping An Eye On U.S. Airlines' Accounting?

Thu Jun 27, 2002 1:38 am

The issue of whether heavy maintenance checks should be expensed or capitalized has been on-going between the IRS and the airlines for several years. The airlines oversold their ability to perform a heavy check, making the airplane "like new", so the IRS was saying that the airplane's net value should return to its original value after each check. Most airlines depreciate their fleets to a certain level and take a one time asset increase, if it sells for more than the depreciated value. For an airline that is the original owner, that is usually what happens.