Kim Park A

Although Singapore Airlines (SIA) and Delta Airlines ( dal) operate in the equivalent industry, apiece respiratory tract takes a different approach to depreciating unyielding-lived assets. SIA depreciates its passenger personal credit linecraft over 10 historic period on a great line basis to 20% residual, while decaliter does the same at 20 years to 5% residual. The difference in accounting practices give the axe be attributed to the customer segment each airline serves: SIA serves premium long haul customers and dekalitre serves meter short haul customers. In severalise to offer a premium level of service, SIA has to adjudge newer airplanes. Hence, the approximate age of the flash is 5-6 years and is depreciated over a shorter lifespan. By depreciating to a 20% residual value, SIA can also gain a higher(prenominal)(prenominal) level of surplus on the books to help encourage gains on sales. The 20% can also be justify because SIA operates long haul flights, meani ng the airplanes be in the air longer and requires less maintenance out-of-pocket to the wear and rub from popular take-offs and landings. Comparatively, dekaliter, which offers standard service, does not exact an advanced fleet.

Hence, DAL keeps its airplanes longer than SIA and the residual value is freeze off because of more frequent take-offs and landings. On further analysis, SIA incurs an $8 derogation expense for every(prenominal) $100 spent on an airplane and DAL incurs $4.75. From an practicable standpoint, SIA can afford to depreciate at a higher rate because its load factor is greater than DALs (76.8% vs 72.9%). Furthermore, SIAs revenue per passenger is higher than DA Ls (SIA $6672000000/15002000=$444, DAL $1565! 7000000/119930000=$130), meaning SIA can weather a higher depreciation rate.If you want to get a amply essay, order it on our website: OrderEssay.net

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