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These excerpts taken from the AYR 10-K filed Mar 2, 2009. Flight
Equipment Held for Lease
Flight equipment held for lease is stated at cost and
depreciated using the straight-line method, typically over a
25 year life from the date of manufacture for passenger
aircraft and over a 30 — 35 year life for
freighter aircraft, depending on whether the aircraft is a
converted or purpose-built freighter, to estimated residual
values. Estimated residual values are generally determined to be
approximately 15% of the manufacturer’s estimated realized
price for passenger aircraft when new and 5% — 10% for
freighter aircraft when new. Management may make exceptions to
this policy on a
case-by-case
basis when, in its judgment, the residual value calculated
pursuant to this policy does not appear to reflect current
expectations of value. Examples of situations where exceptions
may arise include but are not limited to:
In accounting for flight equipment held for lease, we make
estimates about the expected useful lives, the fair value of
attached leases, acquired maintenance liabilities and the
estimated residual values. In making these estimates, we rely
upon actual industry experience with the same or similar
aircraft types and our anticipated utilization of the aircraft.
As part of our due diligence review of each aircraft we
purchase, we prepare an estimate of the expected maintenance
payments and any excess costs which may become payable by us,
taking into consideration the then-current maintenance status of
the aircraft and the relevant provisions of any existing lease.
Determining the fair value of attached leases requires us to
make assumptions regarding the current fair values of leases for
specific aircraft. We estimate a range of current lease rates of
like aircraft in order to determine if the attached lease is
within a fair value range. If a lease is below or above the
range of current lease rates, we present value the estimated
amount below or above fair value range over the remaining term
of the lease. The resulting lease discounts or premiums are
amortized into lease rental income over the remaining term of
the lease.
Our flight equipment held for lease is evaluated for impairment
at least annually or when events and circumstances indicate that
the assets may be impaired. Indicators include third party
appraisals of our aircraft, adverse changes in market conditions
for specific aircraft types and the occurrence of significant
adverse changes in general industry and market conditions that
could affect the fair value of our aircraft.
Flight Equipment Held for Lease Flight equipment held for lease is stated at cost and depreciated using the straight-line method, typically over a 25 year life from the date of manufacture for passenger aircraft and over a 30 — 35 year life for freighter aircraft, depending on whether the aircraft is a converted or purpose-built freighter, to estimated residual values. Estimated residual values are generally determined to be approximately 15% of the manufacturer’s estimated realized price for passenger aircraft when new and 5% — 10% for freighter aircraft when new. Management may make exceptions to this policy on a case-by-case basis when, in its judgment, the residual value calculated pursuant to this policy does not appear to reflect current expectations of value. Examples of situations where exceptions may arise include but are not limited to:
In accounting for flight equipment held for lease, we make estimates about the expected useful lives, the fair value of attached leases, acquired maintenance liabilities and the estimated residual values. In making these estimates, we rely upon actual industry experience with the same or similar aircraft types and our anticipated utilization of the aircraft. As part of our due diligence review of each aircraft we purchase, we prepare an estimate of the expected maintenance payments and any excess costs which may become payable by us, taking into consideration the then-current maintenance status of the aircraft and the relevant provisions of any existing lease. Determining the fair value of attached leases requires us to make assumptions regarding the current fair values of leases for specific aircraft. We estimate a range of current lease rates of like aircraft in order to determine if the attached lease is within a fair value range. If a lease is below or above the range of current lease rates, we present value the estimated amount below or above fair value range over the remaining term of the lease. The resulting lease discounts or premiums are amortized into lease rental income over the remaining term of the lease. Our flight equipment held for lease is evaluated for impairment at least annually or when events and circumstances indicate that the assets may be impaired. Indicators include third party appraisals of our aircraft, adverse changes in market conditions for specific aircraft types and the occurrence of significant adverse changes in general industry and market conditions that could affect the fair value of our aircraft. Flight
Equipment Held for Lease
Flight equipment held for lease is stated at cost and
depreciated using the straight-line method, typically over a
25 year life from the date of manufacture for passenger
aircraft and over a 30 — 35 year life for
freighter aircraft, depending on whether the aircraft is a
converted or purpose-built freighter, to estimated residual
values. Estimated residual values are generally determined to be
approximately 15% of the manufacturer’s estimated realized
price for passenger aircraft when new and 5% — 10% for
freighter aircraft when new. Management may make exceptions to
this policy on a
case-by-case
basis when, in its judgment, the residual value calculated
pursuant to this policy does not appear to reflect current
expectations of value. Examples of situations where exceptions
may arise include but are not limited to:
Table of Contents
Aircastle
Limited and Subsidiaries
Notes to Consolidated Financial Statements (Dollars in thousands, except per share amounts)
Major improvements and modifications incurred in connection with
the acquisition of aircraft that are required to get the
aircraft ready for initial service are capitalized and
depreciated over the remaining life of the flight equipment.
Lease acquisition costs related to reconfiguration of the
aircraft cabin and other lessee specific modifications are
capitalized and amortized into expense over the initial life of
the lease, assuming no lease renewals, and are included in other
assets.
Incentives paid to lessees are capitalized as prepaid lease
incentive costs and are amortized into revenue over the life of
the lease, assuming no lease renewals, and are included in other
assets.
In accounting for flight equipment held for lease, we make
estimates about the expected useful lives, the fair value of
attached leases, acquired maintenance liabilities and the
estimated residual values. In making these estimates, we rely
upon actual industry experience with the same or similar
aircraft types and our anticipated lessee’s utilization of
the aircraft.
Determining the fair value of attached leases requires us to
make assumptions regarding the current fair values of leases for
specific aircraft. We estimate a range of current lease rates of
like aircraft in order to determine if the attached lease is
within a fair value range. If a lease is below or above the
range of current lease rates, we present value the estimated
amount below or above fair value range over the remaining term
of the lease. The resulting lease discounts or premiums are
amortized into lease rental income over the remaining term of
the lease.
Flight Equipment Held for Lease Flight equipment held for lease is stated at cost and depreciated using the straight-line method, typically over a 25 year life from the date of manufacture for passenger aircraft and over a 30 — 35 year life for freighter aircraft, depending on whether the aircraft is a converted or purpose-built freighter, to estimated residual values. Estimated residual values are generally determined to be approximately 15% of the manufacturer’s estimated realized price for passenger aircraft when new and 5% — 10% for freighter aircraft when new. Management may make exceptions to this policy on a case-by-case basis when, in its judgment, the residual value calculated pursuant to this policy does not appear to reflect current expectations of value. Examples of situations where exceptions may arise include but are not limited to:
Table of ContentsAircastle Limited and Subsidiaries Notes to Consolidated Financial Statements (Dollars in thousands, except per share amounts)
Major improvements and modifications incurred in connection with the acquisition of aircraft that are required to get the aircraft ready for initial service are capitalized and depreciated over the remaining life of the flight equipment. Lease acquisition costs related to reconfiguration of the aircraft cabin and other lessee specific modifications are capitalized and amortized into expense over the initial life of the lease, assuming no lease renewals, and are included in other assets. Incentives paid to lessees are capitalized as prepaid lease incentive costs and are amortized into revenue over the life of the lease, assuming no lease renewals, and are included in other assets. In accounting for flight equipment held for lease, we make estimates about the expected useful lives, the fair value of attached leases, acquired maintenance liabilities and the estimated residual values. In making these estimates, we rely upon actual industry experience with the same or similar aircraft types and our anticipated lessee’s utilization of the aircraft. Determining the fair value of attached leases requires us to make assumptions regarding the current fair values of leases for specific aircraft. We estimate a range of current lease rates of like aircraft in order to determine if the attached lease is within a fair value range. If a lease is below or above the range of current lease rates, we present value the estimated amount below or above fair value range over the remaining term of the lease. The resulting lease discounts or premiums are amortized into lease rental income over the remaining term of the lease. This excerpt taken from the AYR 8-K filed Sep 26, 2007. Flight Equipment Held for Lease Flight equipment held for lease is stated at cost and depreciated using the straight-line method over a 25 year life from the date of manufacture to estimated residual values. Estimated residual values are generally determined to be approximately 15% of the manufacturer’s estimated realized price for the flight equipment when new. Management may, at its discretion, make exceptions to this policy on a case-by-case basis when, in its judgment, the residual value calculated pursuant to this policy does not appear to reflect current expectations of residual values. Examples of situations where exceptions may arise include, but are not limited to:
Major improvements and modifications incurred in connection with the acquisition of aircraft that are required to get the aircraft ready for initial service are capitalized and depreciated over the remaining life of the flight equipment. Lease acquisition costs related to reconfiguration of the aircraft cabin and other lessee specific modifications are capitalized and amortized into expense over the initial life of the lease, assuming no lease renewals and are included in other assets. Cash incentives paid to lessees are capitalized as prepaid lease incentive costs and are amortized into revenue over the initial life of the lease, assuming no lease renewals and are included in other assets. Generally, lessees are required to provide for repairs, scheduled maintenance and overhauls during the lease and to be compliant with return conditions of flight equipment at lease termination. Costs paid by us for scheduled maintenance and overhauls in excess of amounts paid by lessees are capitalized and depreciated over a period to the next scheduled maintenance or overhaul event. Miscellaneous repairs are expensed when incurred. Lease discounts or premiums relate to leases acquired with the purchase of an aircraft that were determined to be below or above fair value. This discount or premium is accrued or capitalized and amortized using the straight-line method over the initial lease term assuming no renewals, and is included in other liabilities or other assets in the consolidated balance sheet.
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