(changes are marked according to the assumed effect they have on running your airline)
, to be implemented on Dec 31st (tomorrow)] Aircraft value calculation update.
- This update is part of the accounting system update and has already been prepared by other minor updates earlier. More accounting changes will follow later, this is only one step of the larger process (it's done in steps to ensure a smooth transition also in existing games).
- The aircraft value calculation has been changed from the old and 'fictious' system to the proper accounting method. The old 'aircraft value' is replaced by 'book value' (value of the plane in company's book keeping records) on all relevant pages.
- Aircraft book value for your owned aircraft is counted as follows:
* The basic starting-point value in the company's books for each aircraft is the actual purchase price of the aircraft (for new planes that means the sum of pre-delivery + on-delivery payments, and for used planes the purchase price + any re-config/maintenances paid during purchase).
* This book value is then depreciated over time using the standard straight-line method so that when aircraft reaches the age of 25 years the value is 10% of the original book value (="residual value" or "salvage value"). After 25y the value will not decrease anymore (= 10% residual value is kept).
* If you buy an used aircraft older than 25 years, the book keeping value of this plane will be directly 10% of the purchase price - there is no depreciation period anymore since the 'useful' life of aircraft is considered to be 25yrs. Of course aircraft can and may be used longer (there are no changes to that), but then they will simply have the 10% residual value in the books, even though their 'operational' or 'useful' value could be more.
* Example #1: Original purchase price $150 million, bought as new. The yearly depreciation value is then $5,4mil/yr [= (cost-residualvalue)/lifetime ]. This means that after 1 year the book value of the plane is $144.6mil (= $150-$5.4), and after 20 years $42mil. At 25y the value is $15mil and remains at that.
* Example #2: Used aircraft is aged 10yo and purchased at $100 million. It will have 15 years of useful life left (25-10y) and has the same 10% residual value rule. This means that yearly depreciation is $6mil. So value at 10 years is the $100 million (purchase price). And at 15 years the value has decreased to $70mil and at 25y it reaches $10mil.
* The depreciation is counted once a week (= a/c values updated weekly).
- Depreciation will be added to income statement later. For now it is not visible separately and it has no effect on company's taxable result or anything else, but it will be added later together with changes to the income statement. So for now only the calculation method of the aircraft value has been changed. (you will however see the depreciation on my aircraft details page's 'financial overview' already)
- For leased planes there is naturally no value displayed as you are not their owner. If you wish to purchase the leased plane the buying cost is determined by the broker like previously. In case you purcase the plane the 'book value' will be the actual purchase price what you paid for it, and it will depreciate over the same rules as any purchased used aircraft.
- The transition from old valuation system to the new one:
* Any new aircraft you will be delivered after this update is live will have the book value counted from the actual purchase price.
* Any aircraft you owned before this update was live had initial book value assigned from the old aircraft value. So initially aircraft value becomes simply the new book value for any existing aircraft, and then they start to depreciate normally.
* Any existing owned aircraft older than 25yr will be set to 10% residual book value based on separate calculation.
=> This transition method does not offer the exact/correct book value for existing aircraft but ensures that major changes to company value should remain rather small, and any new aircraft delivered after the update will then have correct values (as well as all planes in any new scenarios after this).
- Also, aircraft in long-term storage and aircraft due to delivery soon (available for scheduling) are now counted towards your overall company value again (according to their book value).
- If you sell your owned plane you are displayed the book value of the aircraft and also a suggested selling price (as per previous update). It is important to understand that these two have nothing to do with each others. The book value is merely an accounting value and it is calculated with a standard formula from the original purchase price (as explained above). The selling price of the aircraft can be freely determined by the player (within the given pricing limits displayed on the page). If the player sells the plane at a higher price than the book value, it is considered as a profit for the airline - and the other way around. Note though - the profit/loss calculation on these sales is still incomplete and will be added later, but this will be the principle. (= so please forget anything about the old 'aircraft value' since it has got nothing to do with this new and proper valuation calculation)
- In similar manner the scrap price is not related to the book value of the aircraft, and you can incur profits/losses from scrapping too.
...all-in-all this change has very minor changes to your airline and running the airline, but it's a larger conceptual change. And like mentioned other accounting related changes will be added later.
EDIT: This update is now online.(this thread is locked to keep it organized, please post all comments to this thread)