Depreciation at Delta Airlines and Singapore Air Lines which means that the Delta ns Singapore airline is depreciating one of its planes, it is trying to match the cost of the air flight with the revenue that the planes helped to produce. Because aircraft may be an item used for multiple periods of the income statement, Delta and Singapore Airlines do not immediately recognize the full cost of the aircraft as an expense. Instead, companies record them as assets on the balance sheet. Then, for each year of the assets' useful life, companies must expense a portion of the item's costs. At the end of the useful life of the fixed assets, companies will dispose of them and any amount received from the disposal will represent their residual value. value. This can be difficult to estimate in practice. However, an estimate must be made. If this is unlikely to be a significant amount, a residual value of zero will be assumed. The cost of fixed assets, less their estimated residual value, represents the total amount to be depreciated over their estimated useful life. line Straight lineResidual value 10% 10% 5%Useful life 10 years 15 years 20 years Depreciation expense per $100 of gross aircraft value (annually) $100 x 0.1 = $10 $100-$10 = $90$90/10 years = $9 per year $100 x 0.1 = $10$100 -$10 = $90$90/15 years = $6 per year $100 x 0.1 = $10$100-$10 = $90$90/20 years = $4.75 per yearSingaporeItem Before July 1, 1989 April 1, 1989 to presentMethod Straight line Straight lineResidual value 10% 20%Useful Life 8 years 10 yearsDepreciation expense per $100 of gross value of aircraft (annually) $100 x 0.1 = $10 $100-$10 = $90 $90/8 years= $11.25 per year $100 x 0.2 = $20 $100-$20 = $80$90/10 years=$8 per yearThe amount each The company should recognize the expense in a given year based on the following factors: • The company estimates the useful life of the assets independently • Value Residual • Depreciation Methods Delta and Singapore Airlines use the straight-line method to calculate annual depreciation expense, which allows each company to assess its residual value and useful life. For example, on April 1, 1989, Singapore Airline paid almost double ($11.25/year) in depreciation to Delta Air Lines between July 1, 1986 and March 31, 1993 ($6/year), the reason is that1 . The estimate was based on a low useful life (8 to 10 years), compared to the Delta airline, 10 to 20 years..

Essay / Depreciation at Delta Airlines and Singapore Air Lines which means that the Delta ns Singapore airline is depreciating one of its planes, it is trying to match the cost of the air flight with the revenue that the planes helped to produce. Because aircraft may be an item used for multiple periods of the income statement, Delta and Singapore Airlines do not immediately recognize the full cost of the aircraft as an expense. Instead, companies record them as assets on the balance sheet. Then, for each year of the assets' useful life, companies must expense a portion of the item's costs. At the end of the useful life of the fixed assets, companies will dispose of them and any amount received from the disposal will represent their residual value. value. This can be difficult to estimate in practice. However, an estimate must be made. If this is unlikely to be a significant amount, a residual value of zero will be assumed. The cost of fixed assets, less their estimated residual value, represents the total amount to be depreciated over their estimated useful life. line Straight lineResidual value 10% 10% 5%Useful life 10 years 15 years 20 years Depreciation expense per $100 of gross aircraft value (annually) $100 x 0.1 = $10 $100-$10 = $90$90/10 years = $9 per year $100 x 0.1 = $10$100 -$10 = $90$90/15 years = $6 per year $100 x 0.1 = $10$100-$10 = $90$90/20 years = $4.75 per yearSingaporeItem Before July 1, 1989 April 1, 1989 to presentMethod Straight line Straight lineResidual value 10% 20%Useful Life 8 years 10 yearsDepreciation expense per $100 of gross value of aircraft (annually) $100 x 0.1 = $10 $100-$10 = $90 $90/8 years= $11.25 per year $100 x 0.2 = $20 $100-$20 = $80$90/10 years=$8 per yearThe amount each The company should recognize the expense in a given year based on the following factors: • The company estimates the useful life of the assets independently • Value Residual • Depreciation Methods Delta and Singapore Airlines use the straight-line method to calculate annual depreciation expense, which allows each company to assess its residual value and useful life. For example, on April 1, 1989, Singapore Airline paid almost double ($11.25/year) in depreciation to Delta Air Lines between July 1, 1986 and March 31, 1993 ($6/year), the reason is that1 . The estimate was based on a low useful life (8 to 10 years), compared to the Delta airline, 10 to 20 years..

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