Publications
Publications
- May 2009 (Revised November 2010)
- HBS Case Collection
Depreciation at Delta Air Lines: The "Fresh Start"
By: William J. Bruns Jr.
Abstract
In estimating depreciation for accounting purposes, Delta Air Lines has changed its assumptions about aircraft lifespan and residual values four times in the last thirty years or so. In the most recent changes, Delta adopted fair value accounting as part of its fresh start emergence from bankruptcy. Each of these policy changes has affected future asset values as well as present and future income. Students should organize their case analysis around three types of questions: (1) the estimated life cycle of commercial passenger airplanes; (2) the uses of financial reports, including the purpose of depreciation in reporting on assets and periodic income; and (3) alternative procedures for reporting asset book values and income that might better serve users of financial reports.
Keywords
Accounting Policies; Accounting Procedures; Depreciation; Bankruptcy; Cost Accounting; Financial Reporting; Insolvency and Bankruptcy; Policy; Air Transportation Industry
Citation
Bruns, William J., Jr. Depreciation at Delta Air Lines: The "Fresh Start". Harvard Business School Brief Case 094-013, May 2009. (Revised November 2010.)