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Alaska Airlines and United Airlines are both passenger airline companies. Although they use similar assets to conduct their businesses, the estimated lives they use to
Alaska Airlines and United Airlines are both passenger airline companies. Although they use similar assets to conduct their businesses, the estimated lives they use to depreciate their assets vary, as shown in the following table. Estimated Useful Lives (years) Asset Category Alaska Airlines United Airlines Aircraft 15-25 25-30 Buildings 25-40 25-45 Computer software 3-10 3-15 Other equipment 5-10 3-15 Managers have significant flexibility in setting the estimated useful lives of depreciable assets, and as the table shows, United Airlines uses longer estimated lives for its assets than does Alaska Airlines. Required a. How does using a longer estimated life for a depreciable asset potentially affect its earnings? b. Would using a longer estimated life for a
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