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Author Topic: Weekly depreciation  (Read 445 times)

Offline Grandmen123

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Weekly depreciation
« on: April 02, 2019, 11:58:33 AM »
Hey so, recently I've been purchasing my Aircraft to move from leased to owned in BW 2, but something weird is happening with two of the A333 that I bought, they are depreciating over 2 million weekly for some reason? This is happening while others aren't depreciating at all....

I'm sort of confused here?

This is one of the planes that's depreciating massively:
https://gyazo.com/cdad323eae73485ffe9a615159bd567e
https://gyazo.com/eee7506e928c767b491bc219198d1b35

While here is one of the planes that doesn't depreciate at all:
https://gyazo.com/57b14406c0c49a16c14a71d8899dd47b
https://gyazo.com/349fec05e0d5ddd02bfce7474c930ee5


Anyone have a clue of what's happening here?

slickwillbo

  • Former member
Re: Weekly depreciation
« Reply #1 on: April 02, 2019, 12:05:05 PM »
I think aircraft are depreciated to 0 at age 25. Your bird depreciating rapidly is just under 25 years old, and the one not depreciating at all is just over 25.

Offline DanDan

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Re: Weekly depreciation
« Reply #2 on: April 02, 2019, 01:30:28 PM »
i can only say what i know from real life: things should depreciate - in terms of accounting - linearly. meaning:

if the lifespan for the purpose of tax deduction is 25 years, the plane costs 25M, then after the first year, the planes worth should be 25M/25*(25-1)=24.
at year 25, the value should be 25M/25*(25-25)=0. this is not considering checks.

the Dchecks would probably have to be deducted over 8 years. meaning:
after 8 years, the plane is worth 25M/25*(25-8)=17M, you add 1M for the Dcheck, value is 18M now.
after 10 years, the value is 25M/25*(25-10)+1M/8*(8-2)=15.75M

but i am rather sure, that AWS is not using accounting standards, as this would mean that prices would have to be logged for all the major checks and the value of the plane would have to be divided for depreciation into the value of maintenance and the value of the plane itself.

Online Sami

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    • AirwaySim - Are you the next Richard Branson?

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Re: Weekly depreciation
« Reply #3 on: April 02, 2019, 01:56:08 PM »
AirwaySim follows general accounting practices.

D check increases the aircraft value, and is also depreciated to the 25yo cycle. Manual tells these with good details.

https://www.airwaysim.com/game/Manual/Office/Accounting/

Offline DanDan

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Re: Weekly depreciation
« Reply #4 on: April 02, 2019, 02:08:40 PM »
AirwaySim follows general accounting practices.

D check increases the aircraft value, and is also depreciated to the 25yo cycle. Manual tells these with good details.

https://www.airwaysim.com/game/Manual/Office/Accounting/

well, thats what i am saying: the dcheck probably wouldnt be deductable over 25 years but over 8 years.

Offline Grandmen123

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Re: Weekly depreciation
« Reply #5 on: April 02, 2019, 06:11:37 PM »
I wasn't too clear about what I was asking, my point is why is the depreciation this high? Considering I have an entire fleet of A320s that depreciates like 20-50k weekly, my A333s are either not depreciating or depreciating over 2MIL, which is causing me major losses. Is this normal?

Also apologies for this, I'm rather new here, but can someone clarify all that talk about D checks? I'm a little confused over it, maybe I missed something in the manual.

Offline groundbum2

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Re: Weekly depreciation
« Reply #6 on: April 02, 2019, 06:46:57 PM »
depreciation goes from the airplanes value, as shown on the aircraft detail page, to $zero at year 25. So it's a straight line down..

So if in year 24 a person bought a plane for $52M it's gona have $1M/week depreciation. Simple maths... But think, after year 25 zero depreciation so the weekly profit will be far higher! Other than the higher maint and 3% increased fuel usage...

Simon

Offline knobbygb

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Re: Weekly depreciation
« Reply #7 on: April 03, 2019, 06:38:44 AM »
Don't forget that it isn't really costing you $1m per week. You already spent the money - it's just a paper-loss. Your cash isn't decreasing at all. In fact, it will be climbing slightly higher than if this wasn't occurring. That $1M per week of loss will be offset against your tax, so you'll pay $10M or so less tax this year!

You'll get a return eventually. If the a/c was indeed bought for around $52M at 23 years old, when you come to scrap it, it might still get $30M+ for it and that will be shown as pure profit as it's book value will be zero. On the downside, you will then pay tax on that amount.
« Last Edit: April 03, 2019, 06:45:03 AM by knobbygb »

 

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