Questions for Depreciation at Delta Case

1. Delta has extended the lives of flight equipment four times since 1986. Why would they do this?

2. Complete the Excel table provided as part of the assignment. When you compare the depreciation results from the planes purchased in the early 1980’s to the planes purchased in the 2000’s, what do you notice?

3. If there had been no adoption of “Fresh Start Accounting”, what would the Net Book Value be for aircraft D4061 and D4072 at the end of 2007? You may add a column to the provided Excel worksheet to calculate the result if you like.

4. When Delta elected “Fresh Start Accounting” for 2007, how did Delta establish the fair value of these assets?

5. In your opinion, should the adoption of “fresh start accounting” be open to any corporation where management feels traditional historical cost-based accounting no longer allows them to present a fair picture of the assets, liabilities, stockholders’ equity and operating performance of that company?