airline

Topics: Depreciation, Generally Accepted Accounting Principles, Expense Pages: 3 (846 words) Published: November 1, 2013
Corporate Accounting Assignment

Abstract

In this report, we compare and contrast the depreciation accounting policies of the two company provided in the case study, Aviator and Eagle. With the results of calculation, we also made comparative comments on the methods. We further our understanding by analyzing an additional company’s depreciation policy and also give an in general summary of the significance of depreciation policy at the end.

Q1
According to AASB116, there are for parts in the depreciation policy.

Both companies depreciate their assets on a straight-line basis but with different residual value and useful life estimation. The annual depreciable amounts were all calculated by the same equation: Depreciation= (cost-estimated residual value)/ estimated useful life

Firstly, they classify their aircraft-related item differently in the Balance Sheet. The Aircraft and Spare parts are listed under “Plant, Property and Equipment” in “Non-current asset” at carrying amount for Aviator and “Fixed Asset” at written-down value for Eagle. For Airline Aviator, assets are depreciate from the date of acquisition unless when dealing with internally constructed assets (then is from the time its completed and ready for use), any improvement cost of asset is being capitalized and amortized over the shorter one between the remaining useful life and the estimated life of the improvement. Assets under finance lease are amortized over the term of the lease. Unlike Aviator, at Eagle Airline no depreciation will be charged onto fully-depreciated Assets and they will be retained in the financial statements at their residual value until they were no longer in use.

Two airlines companies have different but similar disclosure in light of depreciation of Aircraft related items. Depreciation policies are found in “Depreciation and Amortization” as part of Note1 (n) of the ‘Notes to the financial statements’ for Aviator while at Eagle similar information appear...
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