Originally Posted by
Sunfish
Mick, thank you for your reply. Yes, “depreciated book value”will be used. That is the greatest gift to Bain. The airline should be valued as a going concern, but it won’t be. That is why I mentioned the Ansett DC9s. They were sold by Peter and Rupert at something close to depreciated value. The reality was that they were still perfectly good serviceable aircraft and the new owners made $$$. I could go on but I risk defamation.
‘’Australian tax law allowed us to gold plate our aircraft by treating ADs and SBs as expense items, not capital expenditures (again lack of technical accounting skills in the auditors and ATO). The result was that these old aircraft were virtually as new as far as technical specs were concerned. They were worth a lot second hand.
Same with rotables - they are like grandfathers axe.
‘’Book value will be used. Replacement cost is more appropriate.
The example that most people can get their head around is sitting in their garage. What's your car worth? RedBook value? Replacement cost? Whatever it might be worth to you if you just drive it to work and back, it's probably worth something different to someone who is planning on using it as an Uber.
But at the end of the day, it's all largely academic. What your car is worth when you go to sell it is not one cent more than what someone else is prepared to pay you for it. The market is the final arbiter of value.