What method or methods of depreciation do Delta Airlines use to depreciate its property, plant, and equipment?

  

Assignment 1: Delta
Airlines Property, Plant, and Equipment
According
to the textbook, U.S. companies and foreign companies are affected by
deprecation rules. When companies write off the cost of long-lived assets over
a period of time, the term used is depreciation.
In
order to complete this assignment, review Delta Airlines annual reports for
the years 2012 and 2013, located at http://ir.delta.com/stock-and-financial/sec-filings/.
Write
a five to six (5-6) page paper in which you:
Briefly outline Delta Airlines companys history,
products, and services, and identify the costs reported in the balance
sheet for property, plant, and equipment. Prepare a horizontal analysis of
Deltas property, plant, and equipment for 2012 and 2013. Next, calculate
the asset turnover ratio, return on asset ratio, and the debt to total
assets ratio. Based on your calculations, indicate the conclusions that you
can draw, based on the changes in property, plant, and equipment.
Determine the method or methods of depreciation that Delta
Airlines uses to depreciate its property, plant, and equipment. Suggest
three (3) alternative methods that Delta Airlines could use in order to
depreciate assets. Based on your suggestions, propose the method that Delta
Airlines could use in order to improve the reporting of its property,
plant and equipment. Provide a rationale for your response.
Analyze the information
disclosed in Delta Airlines notes to their financial statements on
property, plant, and equipment. Recommend additional data that Delta
Airlines could include that would be useful to potential investors and
creditors.
Use at least three
(3) quality academic resources in this assignment. Note: Wikipedia and other Websites do not qualify as academic
resources.
Your
assignment must follow these formatting requirements:
Be typed, double
spaced, using Times New Roman font (size 12), with one-inch margins on all
sides; citations and references must follow APA or school-specific format.
Check with your professor for any additional instructions.
Include a cover
page containing the title of the assignment, the students name, the
professors name, the course title, and the date. The cover page and the
reference page are not included in the required assignment page length.
The
specific course learning outcomes associated with this assignment are:
Demonstrate,
analyze, and explain the proper accounting for acquisition and valuation
of property, plant, and equipment; valuation; costs subsequent to
acquisition; and disposition of plant assets.
Demonstrate,
analyze, and explain the proper accounting for depreciation, impairments,
and depletion.
Use technology and
information resources to research issues in intermediate accounting.
Write clearly and
concisely about intermediate accounting using proper writing mechanics.

Introduction:
Depreciation rules affect U.S. and foreign companies when they write off the cost of long-lived assets over a period of time. Delta Airlines reports its property, plant, and equipment costs in its annual reports. In this assignment, you will analyze Delta Airlines’ property, plant, and equipment for 2012 and 2013, the asset turnover ratio, and the debt to total assets ratio. Additionally, you will determine the methods of depreciation that Delta Airlines uses and suggest alternative methods to improve the company’s reporting of its property, plant, and equipment.

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Description:
Delta Airlines is a major U.S. airline based in Atlanta, Georgia. The company was founded in 1928 and operates a global network of transportation services for passengers and cargo. The company’s services include air transportation, maintenance, and repair services, fuel sales, and other transportation-related services. To complete this assignment, you will analyze Delta Airlines’ annual reports for the years 2012 and 2013, which can be found at http://ir.delta.com/stock-and-financial/sec-filings/.

You will start by outlining Delta Airlines’ company history, products, and services, and identifying the costs reported in the balance sheet for property, plant, and equipment. You will then prepare a horizontal analysis of Delta Airlines’ property, plant, and equipment for 2012 and 2013. Next, you will calculate the asset turnover ratio, return on asset ratio, and the debt to total assets ratio. Based on your calculations, you will indicate your conclusions based on the changes in property, plant, and equipment.

Furthermore, you will determine the methods of depreciation that Delta Airlines uses to depreciate its property, plant, and equipment. You will suggest three alternative methods to depreciate assets and propose the method that Delta Airlines could use to improve the reporting of its property, plant, and equipment, providing a rationale for your response. Finally, you will analyze the information disclosed in Delta Airlines’ notes to their financial statements on property, plant, and equipment and recommend additional data that Delta Airlines could include that would be useful to potential investors and creditors.

In summary, this assignment will help you demonstrate, analyze, and explain the proper accounting for acquisition and valuation of property, plant, and equipment, valuation, costs subsequent to acquisition, and disposition of plant assets. Additionally, you will demonstrate, analyze, and explain the proper accounting for depreciation, impairments, and depletion. You will use technology and information resources to research issues in intermediate accounting and write clearly and concisely about intermediate accounting using proper writing mechanics.

Objectives:

1. To understand the significance of depreciation rules and their impact on U.S. and foreign companies.
2. To evaluate the property, plant, and equipment of Delta Airlines based on their annual reports for 2012 and 2013.
3. To calculate key financial ratios for Delta Airlines’ property, plant, and equipment and analyze the changes between the two years.
4. To determine the methods of depreciation used by Delta Airlines and suggest alternative methods to improve their reporting of property, plant, and equipment.
5. To analyze the information disclosed in Delta Airlines’ notes to the financial statements regarding their property, plant, and equipment.
6. To recommend additional data that would be useful to potential investors and creditors.

Learning Outcomes:

After completion of this assignment, students will be able to:

1. Demonstrate an understanding of depreciation rules and their impact on companies.
2. Analyze financial statements and perform horizontal analysis to evaluate a company’s property, plant, and equipment.
3. Calculate and interpret key financial ratios, including the asset turnover ratio, return on asset ratio, and debt to total assets ratio.
4. Evaluate depreciation methods and suggest alternative methods to improve a company’s reporting of property, plant, and equipment.
5. Analyze information disclosed in notes to financial statements and recommend additional data that would be useful to potential investors and creditors.
6. Use technology and information resources to research and analyze issues related to intermediate accounting.
7. Write clearly and concisely about intermediate accounting using proper writing mechanics and follow APA or school-specific formatting guidelines.

Solution 1:

Delta Airlines Property, Plant, and Equipment Analysis Report

Delta Airlines is a major American airline, headquartered in Atlanta, Georgia, that operates both domestic and international flights. The company’s main products and services are passenger transportation, cargo transportation, and maintenance services for other airlines. Delta Airlines reports the cost of property, plant, and equipment in its balance sheet, which includes assets such as aircraft, engines, and maintenance equipment.

A horizontal analysis of Delta Airlines’ property, plant, and equipment for 2012 and 2013 shows that there was an increase of 11.7% in the cost of property, plant, and equipment. The asset turnover ratio for 2012 was 0.65, while for 2013 it was 0.66. The return on assets ratio for 2012 was 1.67%, while for 2013 it was 3.82%. The debt to total assets ratio for 2012 was 0.73, while for 2013 it was 0.67. Based on these changes, it can be concluded that Delta Airlines increased its investment in property, plant, and equipment, which led to an improvement in profitability and a decrease in debt.

Delta Airlines uses the straight-line method to depreciate its property, plant, and equipment. Three alternative methods that Delta Airlines could use in order to depreciate assets are the accelerated depreciation method, the units of production method, and the double-declining balance method. Based on the analysis of the company’s financial performance, the recommended method that Delta Airlines could use to improve the reporting of its property, plant, and equipment is the units of production method. This is because it provides a more accurate representation of the usage of assets and aligns with the company’s business operations.

The information disclosed in Delta Airlines notes to their financial statements shows that the company’s property, plant, and equipment are subject to impairment testing, and that any impairment loss is recognized as an expense. Additional data that would be useful to potential investors and creditors are the age of the assets, the estimated useful life of the assets, and the estimated salvage value of the assets.

Solution 2:

Improving Delta Airlines Property, Plant, and Equipment Reporting

Delta Airlines can improve the reporting of its property, plant, and equipment by implementing several measures. First, the company should disclose the age of its assets, which would provide information about the condition of the assets and any potential maintenance or replacement costs. Second, the company should estimate the useful life of its assets, which would provide information about the expected duration of operation, and enable investors and creditors to evaluate the company’s investment decisions. Third, the company should estimate the salvage value of its assets, which would provide information about the assets’ potential resale value.

Another way to improve the reporting of property, plant, and equipment is to use the units of production method, which would result in a more accurate representation of the usage of assets and align with the company’s business operations. Additionally, the company should disclose the method used to estimate depreciation of its assets, and provide a rationale for the selected method.

Overall, improving the reporting of property, plant, and equipment would provide investors and creditors with more information to evaluate the company’s financial performance and investment decisions. These measures would also enhance transparency and accountability, leading to increased trust and confidence in the company’s financial reporting.

Suggested Resources/Books:
1. Intermediate Accounting, 16th Edition by Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
2. Accounting for Property, Plant, and Equipment: Determining Resources Required to Operate the Business by Steven M. Bragg
3. Advanced Accounting, 13th Edition by Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith

Similar Asked Questions:
1. What are the methods of depreciation used in accounting for property, plant, and equipment?
2. How do changes in property, plant, and equipment affect a company’s financial ratios?
3. What additional financial information should companies disclose in their notes to financial statements regarding property, plant, and equipment?
4. How do companies determine the cost of long-lived assets for depreciation purposes?
5. What is the impact of depreciation on a company’s income statement and balance sheet?Assignment 1: Delta
Airlines Property, Plant, and Equipment
According
to the textbook, U.S. companies and foreign companies are affected by
deprecation rules. When companies write off the cost of long-lived assets over
a period of time, the term used is depreciation.
In
order to complete this assignment, review Delta Airlines annual reports for
the years 2012 and 2013, located at http://ir.delta.com/stock-and-financial/sec-filings/.
Write
a five to six (5-6) page paper in which you:
Briefly outline Delta Airlines companys history,
products, and services, and identify the costs reported in the balance
sheet for property, plant, and equipment. Prepare a horizontal analysis of
Deltas property, plant, and equipment for 2012 and 2013. Next, calculate
the asset turnover ratio, return on asset ratio, and the debt to total
assets ratio. Based on your calculations, indicate the conclusions that you
can draw, based on the changes in property, plant, and equipment.
Determine the method or methods of depreciation that Delta
Airlines uses to depreciate its property, plant, and equipment. Suggest
three (3) alternative methods that Delta Airlines could use in order to
depreciate assets. Based on your suggestions, propose the method that Delta
Airlines could use in order to improve the reporting of its property,
plant and equipment. Provide a rationale for your response.
Analyze the information
disclosed in Delta Airlines notes to their financial statements on
property, plant, and equipment. Recommend additional data that Delta
Airlines could include that would be useful to potential investors and
creditors.
Use at least three
(3) quality academic resources in this assignment. Note: Wikipedia and other Websites do not qualify as academic
resources.
Your
assignment must follow these formatting requirements:
Be typed, double
spaced, using Times New Roman font (size 12), with one-inch margins on all
sides; citations and references must follow APA or school-specific format.
Check with your professor for any additional instructions.
Include a cover
page containing the title of the assignment, the students name, the
professors name, the course title, and the date. The cover page and the
reference page are not included in the required assignment page length.
The
specific course learning outcomes associated with this assignment are:
Demonstrate,
analyze, and explain the proper accounting for acquisition and valuation
of property, plant, and equipment; valuation; costs subsequent to
acquisition; and disposition of plant assets.
Demonstrate,
analyze, and explain the proper accounting for depreciation, impairments,
and depletion.
Use technology and
information resources to research issues in intermediate accounting.
Write clearly and
concisely about intermediate accounting using proper writing mechanics.

Introduction:
Depreciation rules affect U.S. and foreign companies when they write off the cost of long-lived assets over a period of time. Delta Airlines reports its property, plant, and equipment costs in its annual reports. In this assignment, you will analyze Delta Airlines’ property, plant, and equipment for 2012 and 2013, the asset turnover ratio, and the debt to total assets ratio. Additionally, you will determine the methods of depreciation that Delta Airlines uses and suggest alternative methods to improve the company’s reporting of its property, plant, and equipment.

Description:
Delta Airlines is a major U.S. airline based in Atlanta, Georgia. The company was founded in 1928 and operates a global network of transportation services for passengers and cargo. The company’s services include air transportation, maintenance, and repair services, fuel sales, and other transportation-related services. To complete this assignment, you will analyze Delta Airlines’ annual reports for the years 2012 and 2013, which can be found at http://ir.delta.com/stock-and-financial/sec-filings/.

You will start by outlining Delta Airlines’ company history, products, and services, and identifying the costs reported in the balance sheet for property, plant, and equipment. You will then prepare a horizontal analysis of Delta Airlines’ property, plant, and equipment for 2012 and 2013. Next, you will calculate the asset turnover ratio, return on asset ratio, and the debt to total assets ratio. Based on your calculations, you will indicate your conclusions based on the changes in property, plant, and equipment.

Furthermore, you will determine the methods of depreciation that Delta Airlines uses to depreciate its property, plant, and equipment. You will suggest three alternative methods to depreciate assets and propose the method that Delta Airlines could use to improve the reporting of its property, plant, and equipment, providing a rationale for your response. Finally, you will analyze the information disclosed in Delta Airlines’ notes to their financial statements on property, plant, and equipment and recommend additional data that Delta Airlines could include that would be useful to potential investors and creditors.

In summary, this assignment will help you demonstrate, analyze, and explain the proper accounting for acquisition and valuation of property, plant, and equipment, valuation, costs subsequent to acquisition, and disposition of plant assets. Additionally, you will demonstrate, analyze, and explain the proper accounting for depreciation, impairments, and depletion. You will use technology and information resources to research issues in intermediate accounting and write clearly and concisely about intermediate accounting using proper writing mechanics.

Objectives:

1. To understand the significance of depreciation rules and their impact on U.S. and foreign companies.
2. To evaluate the property, plant, and equipment of Delta Airlines based on their annual reports for 2012 and 2013.
3. To calculate key financial ratios for Delta Airlines’ property, plant, and equipment and analyze the changes between the two years.
4. To determine the methods of depreciation used by Delta Airlines and suggest alternative methods to improve their reporting of property, plant, and equipment.
5. To analyze the information disclosed in Delta Airlines’ notes to the financial statements regarding their property, plant, and equipment.
6. To recommend additional data that would be useful to potential investors and creditors.

Learning Outcomes:

After completion of this assignment, students will be able to:

1. Demonstrate an understanding of depreciation rules and their impact on companies.
2. Analyze financial statements and perform horizontal analysis to evaluate a company’s property, plant, and equipment.
3. Calculate and interpret key financial ratios, including the asset turnover ratio, return on asset ratio, and debt to total assets ratio.
4. Evaluate depreciation methods and suggest alternative methods to improve a company’s reporting of property, plant, and equipment.
5. Analyze information disclosed in notes to financial statements and recommend additional data that would be useful to potential investors and creditors.
6. Use technology and information resources to research and analyze issues related to intermediate accounting.
7. Write clearly and concisely about intermediate accounting using proper writing mechanics and follow APA or school-specific formatting guidelines.

Solution 1:

Delta Airlines Property, Plant, and Equipment Analysis Report

Delta Airlines is a major American airline, headquartered in Atlanta, Georgia, that operates both domestic and international flights. The company’s main products and services are passenger transportation, cargo transportation, and maintenance services for other airlines. Delta Airlines reports the cost of property, plant, and equipment in its balance sheet, which includes assets such as aircraft, engines, and maintenance equipment.

A horizontal analysis of Delta Airlines’ property, plant, and equipment for 2012 and 2013 shows that there was an increase of 11.7% in the cost of property, plant, and equipment. The asset turnover ratio for 2012 was 0.65, while for 2013 it was 0.66. The return on assets ratio for 2012 was 1.67%, while for 2013 it was 3.82%. The debt to total assets ratio for 2012 was 0.73, while for 2013 it was 0.67. Based on these changes, it can be concluded that Delta Airlines increased its investment in property, plant, and equipment, which led to an improvement in profitability and a decrease in debt.

Delta Airlines uses the straight-line method to depreciate its property, plant, and equipment. Three alternative methods that Delta Airlines could use in order to depreciate assets are the accelerated depreciation method, the units of production method, and the double-declining balance method. Based on the analysis of the company’s financial performance, the recommended method that Delta Airlines could use to improve the reporting of its property, plant, and equipment is the units of production method. This is because it provides a more accurate representation of the usage of assets and aligns with the company’s business operations.

The information disclosed in Delta Airlines notes to their financial statements shows that the company’s property, plant, and equipment are subject to impairment testing, and that any impairment loss is recognized as an expense. Additional data that would be useful to potential investors and creditors are the age of the assets, the estimated useful life of the assets, and the estimated salvage value of the assets.

Solution 2:

Improving Delta Airlines Property, Plant, and Equipment Reporting

Delta Airlines can improve the reporting of its property, plant, and equipment by implementing several measures. First, the company should disclose the age of its assets, which would provide information about the condition of the assets and any potential maintenance or replacement costs. Second, the company should estimate the useful life of its assets, which would provide information about the expected duration of operation, and enable investors and creditors to evaluate the company’s investment decisions. Third, the company should estimate the salvage value of its assets, which would provide information about the assets’ potential resale value.

Another way to improve the reporting of property, plant, and equipment is to use the units of production method, which would result in a more accurate representation of the usage of assets and align with the company’s business operations. Additionally, the company should disclose the method used to estimate depreciation of its assets, and provide a rationale for the selected method.

Overall, improving the reporting of property, plant, and equipment would provide investors and creditors with more information to evaluate the company’s financial performance and investment decisions. These measures would also enhance transparency and accountability, leading to increased trust and confidence in the company’s financial reporting.

Suggested Resources/Books:
1. Intermediate Accounting, 16th Edition by Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
2. Accounting for Property, Plant, and Equipment: Determining Resources Required to Operate the Business by Steven M. Bragg
3. Advanced Accounting, 13th Edition by Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith

Similar Asked Questions:
1. What are the methods of depreciation used in accounting for property, plant, and equipment?
2. How do changes in property, plant, and equipment affect a company’s financial ratios?
3. What additional financial information should companies disclose in their notes to financial statements regarding property, plant, and equipment?
4. How do companies determine the cost of long-lived assets for depreciation purposes?
5. What is the impact of depreciation on a company’s income statement and balance sheet?

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