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Not yet answered Marked out of 25.00 Question 2 (25 marks) BEHAVIOURAL IMPLICATIONS OF AIRLINES DEPRECIATION ACCOUNTING POLICY CHOICES Delta, Singapore, Lufthansa Airlines and AMR Corporation have history of well maintained aircrafts with infinite flying time. The following table exhibits the details about each of the airline policies with regard to their depreciation accounting policies. Details AMR Corporation Delta Singapore Airlines Airlines Straight line Straight line Lufthansa Airlines Straight line Accounting Method Straight line Useful Life 20 years 15 years 12 years 25 Residual Value 5% 10% 15% 10% The accounting policy is considered to be conservative (prudent) if it holds back on recognition of income and push forward on the expense. Conversely, the policy is deemed liberal if it recognises income and holds back the expense. Source: Matt Christensen, (2012), Behavioural Implications of Airline Depreciation Accounting Policy Choices, Popular Presentation at Prezi.com (b) From your understanding of Political Cost Hypothesis, which of the companies are likely to be exposed to political visibility? Justify your answer. [10 marks]