|Quoting cmf (Reply 8):|
As I understand it, all depreciation does is decide over what time you take the costs of that asset. A fast depreciation means you take higher costs and show less profit and a slow depreciation means you take less cost and show more profit. Why tax authorities set minimum depreciation times. I'm not aware of any major differences in minimum depreciation times around the world so it really is about how each airline decide to operate.
The depreciation is only interesting while you hold the planes, and everyone wants as large and quick depreciation in their books to minmize taxes. IIRC correct Sinagpore allows for faster depreciation than most other countries.
The depreciation is anyhow not relevant the day you sell the plane, as a plane which is fully written of in the books will be subject to capital gain for the differrence between book value and sales price. So in the final end, the actual depreciation is just the difference between purchase and sales price. Hence the fast pace of depreciation is just a way to get tax deduction early and push an eventual capital gain forward.