Question

The 2011 annual report of Alaska Airlines contained the following footnote:
PROPERTY, EQUIPMENT, AND DEPRECIATION—Property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives, which are as follows:
Aircraft and related flight equipment ........... 15–20 years
Buildings ...................... 25–30 years
Capitalized leases & leasehold improvements Shorter of lease term or estimated useful life
Minor building and land improvements .......... 10 years
Computer hardware and software ........... 3–5 years
Other furniture and equipment ............. 5–10 years
Consider a Boeing 737-100 airplane that Alaska acquired for $50 million. Its useful life is 20 years, and its expected residual value is $6 million. Prepare a tabular comparison of the annual depreciation and book value for each of the first 3 years of service life under straight-line and DDB depreciation. Show all amounts in thousands of dollars (rounded to the nearest thousand).



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  • CreatedFebruary 20, 2015
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