QUESTIONS 1 Estimate the depreciation expense to asset cost ratio using the information in Exhibit 2. Does the variation in this ratio support the variation in accounting indicated by the written accounting policies? EXHIBIT 2 Selected financial statement items (continued) EXHIBIT 2 Selected financial statement items (continued) QANTAS AIRWAYS LIMITED SINGAPORE AIRLINES LIMITED $M $M 30 June 2013 2012 2013 2012 31-Mar Aircraft Aircraft and engines Cost 18 486 18 799 Cost 19 144 19 229 7 411 7 521 8 598 8 205 11 075 11 278 10 546 11 024 1 175 1 123 1 446 1433 Accumulated Carrying amount Depreciation Aircraft spare parts Cost Accumulated depreciation NBA Accumulated depreciation Carrying amount Depreciation Impairment Aircraft spare engines Cost 9.2 14.3 885 875 433 468 198 305 417 442 Accumulated 123 211 61 54 75 94 Depreciation EBIT 204 -173 Carrying amount Depreciation Aircraft spares 19 9 Total assets 20 200 21 178 Cost 612 615 Source: Qantas Airways Limited, Annual Report, 2012, 2013. 357 349 Accumulated depreciation NBA Depreciation 266 255 28 27 EBIT 462 471 Total assets 22 428 22 043 Source: Singapore Airlines Limited, Annual Report, 2012, 2013. EXHIBIT 2 Selected financial statement items EXHIBIT 2 Selected financial statement items (continued) 2012 2011 KOREAN AIR LINES CO., LIMITED Won 'M 31 December Aircraft and engines Cost 2012 2011 AIR CHINA LIMITED RMB'M 31 December Aircraft and flight equipment Cost Accumulated depreciation Carrying amount Depreciation Impairment EBIT 180 584 71 505 109 079 159 995 64 364 18 012 976 14 002 516 7365 521 5 808 238 10 647 455 8 194 278 1 385 303 1 206 344 95 631 9587 8 690 581 2237 8 209 6259 Accumulated depreciation Carrying amount Depreciation Aircraft parts Cost Accumulated depreciation Carrying amount Depreciation EBIT Total assets 187 591 175 850 Source: Air China, Annual Report, 2011, 2012. 228 899 219 870 120 670 110 863 108 229 109 007 12 162 11 317 835 769 80 878 20 678 036 20 333 503 AIR NEW ZEALAND LIMITED $M Total assets 30 June 2013 2012 Source: Korean Air Lines Co., Limited, Annual Report, 2011, 2012. 3932 3 822 -1 444 -1 216 MALAYSIAN AIRLINE SYSTEM BERHAD RM'000 31 December 2488 2 606 2012 2011 319 270 Aircraft Cost 5 9 843 458 Aircraft, spare engines and simulators Cost Accumulated depreciation Carrying amount Depreciation Impairment Spares Cost Accumulated depreciation Carrying amount Depreciation EBIT 921 017 8 922 441 4370 619 555 142 3 815 477 264 263 -147 116 -136 289 583 163 343 224 089 128 15 19 310 5612 Accumulated depreciation Carrying amount Depreciation Impairment Aircraft spare engines Cost Accumulated depreciation Carrying amount Depreciation EBIT 387 079 365 540 158 5 459 Total assets 158 175 111 095 254 445 Source: Air New Zealand Limited, Annual Report, 2012, 2013 (Continued) 228 904 47 080 14 188 -189 542-2 353 420 17 291 118 12 499 476 Total assets Source: Malaysian Airline System Berhad, Annual Report, 2011, 2012, (Continued) QUESTIONS 1 Estimate the depreciation expense to asset cost ratio using the information in Exhibit 2. Does the variation in this ratio support the variation in accounting indicated by the written accounting policies? EXHIBIT 2 Selected financial statement items (continued) EXHIBIT 2 Selected financial statement items (continued) QANTAS AIRWAYS LIMITED SINGAPORE AIRLINES LIMITED $M $M 30 June 2013 2012 2013 2012 31-Mar Aircraft Aircraft and engines Cost 18 486 18 799 Cost 19 144 19 229 7 411 7 521 8 598 8 205 11 075 11 278 10 546 11 024 1 175 1 123 1 446 1433 Accumulated Carrying amount Depreciation Aircraft spare parts Cost Accumulated depreciation NBA Accumulated depreciation Carrying amount Depreciation Impairment Aircraft spare engines Cost 9.2 14.3 885 875 433 468 198 305 417 442 Accumulated 123 211 61 54 75 94 Depreciation EBIT 204 -173 Carrying amount Depreciation Aircraft spares 19 9 Total assets 20 200 21 178 Cost 612 615 Source: Qantas Airways Limited, Annual Report, 2012, 2013. 357 349 Accumulated depreciation NBA Depreciation 266 255 28 27 EBIT 462 471 Total assets 22 428 22 043 Source: Singapore Airlines Limited, Annual Report, 2012, 2013. EXHIBIT 2 Selected financial statement items EXHIBIT 2 Selected financial statement items (continued) 2012 2011 KOREAN AIR LINES CO., LIMITED Won 'M 31 December Aircraft and engines Cost 2012 2011 AIR CHINA LIMITED RMB'M 31 December Aircraft and flight equipment Cost Accumulated depreciation Carrying amount Depreciation Impairment EBIT 180 584 71 505 109 079 159 995 64 364 18 012 976 14 002 516 7365 521 5 808 238 10 647 455 8 194 278 1 385 303 1 206 344 95 631 9587 8 690 581 2237 8 209 6259 Accumulated depreciation Carrying amount Depreciation Aircraft parts Cost Accumulated depreciation Carrying amount Depreciation EBIT Total assets 187 591 175 850 Source: Air China, Annual Report, 2011, 2012. 228 899 219 870 120 670 110 863 108 229 109 007 12 162 11 317 835 769 80 878 20 678 036 20 333 503 AIR NEW ZEALAND LIMITED $M Total assets 30 June 2013 2012 Source: Korean Air Lines Co., Limited, Annual Report, 2011, 2012. 3932 3 822 -1 444 -1 216 MALAYSIAN AIRLINE SYSTEM BERHAD RM'000 31 December 2488 2 606 2012 2011 319 270 Aircraft Cost 5 9 843 458 Aircraft, spare engines and simulators Cost Accumulated depreciation Carrying amount Depreciation Impairment Spares Cost Accumulated depreciation Carrying amount Depreciation EBIT 921 017 8 922 441 4370 619 555 142 3 815 477 264 263 -147 116 -136 289 583 163 343 224 089 128 15 19 310 5612 Accumulated depreciation Carrying amount Depreciation Impairment Aircraft spare engines Cost Accumulated depreciation Carrying amount Depreciation EBIT 387 079 365 540 158 5 459 Total assets 158 175 111 095 254 445 Source: Air New Zealand Limited, Annual Report, 2012, 2013 (Continued) 228 904 47 080 14 188 -189 542-2 353 420 17 291 118 12 499 476 Total assets Source: Malaysian Airline System Berhad, Annual Report, 2011, 2012, (Continued)