현진고속과 동진운수의 감가상각추정 변경사례

The bus transportation industry faces fierce competition with the development of alternative transportation methods, such as private cars, high-speed trains, and air transportations. “Hyon-Jin Express Bus, Inc.” also suffers from the market condition of transportation industry. However, “Hyon-Jin Express Bus, Inc.” focuses on high- end market, by providing high-quality service. The Hyon-Jin Express Bus purchases new and cutting edge buses, maintain them well, and sell them relatively early to keep only up to date vehicles in the company's fleet. By thorough costs reduction and development of new profitable routes, Hyon-Jin Express Bus, Inc. achieves sales growth and earnings growth and becomes the most profitable bus company. In contrast, “Dong-Jin Intercity Bus, Inc.” is in a financial trouble recently due to poor financial performance. The company needs to raise outside capital for the company in order to replace old bus and funds for operation. But the company record deficit for two years in a row and it seems that it is not easy to attract outside investors to raise necessary funds. Under this circumstance, both the Chief Executive Officer of the Hyon-Jin and Dong-Jin changes accounting estimates used for the calculation of depreciation expense. Students can learn accounting treatment for accounting estimate changes, the effect of accounting changes on the financial information included in the financial statements, and the intention of the management to change accounting methods.