Depreciation: Airplanes and Garbage Trucks

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ACCTNG 3402 – Financial Accounting and Reporting II Assignment due February 13, 2013

Spring, 2013

Depreciation: Airplanes and Garbage Trucks
Your answers to the questions below should be clear, well-written, free of grammar and spelling errors, double-spaced with margins of at least one inch on all sides, and word-processed. In preparing this assignment, you may discuss the issues with each other or with anyone else, but your written answers must be your own work. If you need to quote someone else in your answer, you must give credit to your source. This assignment is due at the beginning of class on February 13, and should be printed and submitted in hard copy in class. No late papers will be accepted. If you cannot be in class on February 13, you may email your paper to stuerkep@umsl.edu before the start of class on February 13. The assignment must be included as an attachment to the email in a single file in either Word or .pdf format. Please include your name on the first page of the assignment, and name the file with your name and the name of the assignment (example: John Smith Airplanes assignment.docx). We will discuss the assignment in class on the 12th. It would be a good idea to bring a second copy of your paper to have with you during the class discussion. Part I: Airplanes Attached are excerpts taken from the 2004 annual reports of Northwest Airlines, Delta Airlines and United Airlines. Assume that on January 1, 2005, each of the three airlines purchases a new Boeing 757 for $75 million. Each airline estimates that the residual value will be 5% of cost. Each airline uses the average depreciation period that is consistent with its policies as stated in the Appendix, found on page 3. On January 1, 2009, each firm sells the plane. First, assume that Northwest sells its plane for $55 million, Delta sells its plane for $60 million, and United sells its plane for $65 million (Sale Price I). Second, assume each firm sells its plane for $60 million...
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