Airline X depreciates itsairplanes over a 15-year period and

Airline X depreciates itsairplanes over a 15-year period and.
Airline X depreciates itsairplanes over a 15-year period and estimates a salvage value of 10% ofthe cost of the plane. At the same time, Airline Y depreciates identicalairplanes over a 25-year period and estimates a salvage value of 15% ofthe cost of the plane. As expected, these different assumptionsresulted in different operating results. For example, if an airplanecosts $ 10 million, Airline X will depreciate $ 260,000 more per yearfor 15 years than Airline Y.Which company s estimate ofuseful life more closely reflects reality? Will you feel comfortable as apassenger in a 25-year old airplane? Does the fact that Airline Ysubsequently went out of business provide any information as to why itsestimates were so substantially different from those of financiallysound Airline X?
Airline X depreciates itsairplanes over a 15-year period and