3. In 2009 Lufthansa, the German national airline, reported that it deprecated its aircraft over 14 years on a straight-line basis, with an estimated residual value of 15% of Initial cost. Air France KLM, an airline formed in 2004 by the merger of the French airline Air France and the Dutch airline KLM, is one of Lufthansa's main competitors. In contrast to Lufthansa, Air France KLM reported that its aircraft depreciation was also estimated using the straight-line method but assuming an average life of 18 years and residual value of 10% of initial cost. If there do not appear to be operating differences that explain the differences in the two fimms' depreciation rates, the analyst may well decide that it is necessary to adjust the depreciation rates for one or both firms to ensure that their performance is comparable Lufthansa reported in its 2009 Annual Report the total cost of its aircraft at the beginning of 2009 as C 26,768 m, and that accumulated depreciation was 18900 m. Estimate the average life of Lufthansa's fleet. Lufthansa made another new investment in new aircraft for 5,056 m at the beginning of 2009. Record the necessary adjustments in the financial statement of Lufthansa for the year 2009 by considering the useful life and salvage estimates of Air France KLM for both the investments of Lufthansa. Assume the marginal tax rate of 25%. (Marks: 6)