Question

both spam am airlines and twb airlines used straight-line depreciation for a $20 million jet. spam am used an estimated 35 year useful life and twb airlines used an estimated 25 year life for its planes but estimated similar residual values. as result of the differences in useful lives, which company will appear more profitable?

Answer 1

As a result of the differences in useful lives, Spam am airlines would appear more profitable.

Which airline would appear more profitable?

Straight line depreciation is a method used to transfer the cost of an asset to the income statement of a company. The straight line depreciation expenses the cost linearly.

Straight line depreciation expense = (Cost of asset - Salvage value) / useful life

The longer the useful life of an asset, the longer the years the cost of the asset would be spread out over the years. Thus, the longer the useful life, the more profitable the asset.

To learn more about straight line depreciation, please check: https://brainly.com/question/6982430

#SPJ1