Page 25 - FINAL CFA I SLIDES JUNE 2019 DAY 8
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LOS 29.d: Describe the different depreciation methods for property,
plant, and equipment and calculate depreciation expense. p.215. Session Unit 8:
29. Long-lived Assets
Example: Component depreciation, p.216
Global Airlines purchased a new airplane with an all-inclusive cost of $50 million. The estimated life of the airplane is 30
years and the estimated salvage value is $5 million. Global expects to replace the interior of the aircraft after 15 years. The
component cost of the interior is estimated at $3 million. Calculate depreciation expense in Year 1 using the straight-line
method, both assuming the interior is a separate component and assuming the component method is not used.
tanties
