Account Case Study
HARVARD BUSINESS SCHOOL CASE STUDY
DEPRECIATION AT DELTA AIR LINES
ACCOUNTING ( SHAC 1033 )
2014/2015
SEMESTER 1
GROUP MEMBERS :
MOHD AMMARUL HAZIQ BIN SAIDIN A14HA0057
NURSAIDA SYAMIM BINTI FAUZI A14HA0136
NORHAMIZAH BINTI ABDUL HAMID A14HA0095
FATIN RAIHANAH BINTI MOHAMED RABEI A14HA0024
FOR:
EN. KAMARUZZAMAN BIN ABDUL RAHIM
FACULTY OF MANAGEMENT
UNIVERSITI TECHNOLOGI MALAYSIA
DATE: 18 / 12 / 2014
1. Define and explain “Fresh Start Accounting”.
Generally, when emergence occurs, a company’s balance sheet is to be restated to Fair Value, as required by American Institute of Certified Public Accountants. Fresh Start accounting gives a breath of bookkeeping fresh air to a company that has emerged from bankruptcy. Then, upon emergence from bankruptcy, the consolidated financial statements of the “successor Company” apply the provisions of the fresh start accounting in according to Generally Accepted Accounting Principles (GAAP). Under fresh start accounting, a new reporting entity, the “successor company”, is considered to be created, and the recorded amounts of assets and liabilities are adjusted to describe their fair value. As a result, the reported historical financial statements of the “predecessor Company” generally are not comparable to those of the “successor Company”. Based on HBS case study, fresh start accounting requires resetting the historic net value of assets and liabilities to fair value and becoming a new entity for financial reporting purpose. Delta’s consolidate financial statement after May 1, 2007, are not comparable to consolidated financial statements before that date.
2. Identify and explain other methods for measurement of assets apart from historical cost.
The accounting view of asset value is to pressing a very important principle of historical cost, which is the original cost of the
DEPRECIATION AT DELTA AIR LINES
ACCOUNTING ( SHAC 1033 )
2014/2015
SEMESTER 1
GROUP MEMBERS :
MOHD AMMARUL HAZIQ BIN SAIDIN A14HA0057
NURSAIDA SYAMIM BINTI FAUZI A14HA0136
NORHAMIZAH BINTI ABDUL HAMID A14HA0095
FATIN RAIHANAH BINTI MOHAMED RABEI A14HA0024
FOR:
EN. KAMARUZZAMAN BIN ABDUL RAHIM
FACULTY OF MANAGEMENT
UNIVERSITI TECHNOLOGI MALAYSIA
DATE: 18 / 12 / 2014
1. Define and explain “Fresh Start Accounting”.
Generally, when emergence occurs, a company’s balance sheet is to be restated to Fair Value, as required by American Institute of Certified Public Accountants. Fresh Start accounting gives a breath of bookkeeping fresh air to a company that has emerged from bankruptcy. Then, upon emergence from bankruptcy, the consolidated financial statements of the “successor Company” apply the provisions of the fresh start accounting in according to Generally Accepted Accounting Principles (GAAP). Under fresh start accounting, a new reporting entity, the “successor company”, is considered to be created, and the recorded amounts of assets and liabilities are adjusted to describe their fair value. As a result, the reported historical financial statements of the “predecessor Company” generally are not comparable to those of the “successor Company”. Based on HBS case study, fresh start accounting requires resetting the historic net value of assets and liabilities to fair value and becoming a new entity for financial reporting purpose. Delta’s consolidate financial statement after May 1, 2007, are not comparable to consolidated financial statements before that date.
2. Identify and explain other methods for measurement of assets apart from historical cost.
The accounting view of asset value is to pressing a very important principle of historical cost, which is the original cost of the
References: 1. www.wikinvest.com 2. www.prezi.com 3. http://www.mondaq.com/unitedstates/x/83990/After+The+Bankruptcy+Fresh+Start+Accounting 4. http://garyrushin.com/my_blog/business-restructuring-strategies/chapter-11-bankruptcy-know- fresh-start-accounting-in-the-restructuring-process/ 5. http://www.hl.com/us/opinionadvisory/taxreportingvaluation/freshstartaccounting.aspx 6. http://www.pwc.com/us/en/audit-assurance-services/capital-markets/bankruptcy-reporting.jhtml 7. http://www.complianceweek.com/blogs/colleen-cunningham/reorganizing-take-advantage-of-fresh-start-accounting 8. Bruns, W. J. (n.d.). Depreciation at Delta Air Lines ; The Fresh Start.