# ASC 360-908-05: Property, Plant, and Equipment — Airlines — 05 Overview and Background

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/360/908/#05-overview-and-background)

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## ASC 360-908-05: 05 Overview and Background

[Read section](https://asc.understandingaccounting.org/asc/360/908/#05-overview-and-background)

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##### [360-908-05-1](https://asc.understandingaccounting.org/asc/360/908/#360-908-05-1)

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This Subtopic provides guidance for accounting for certain property, plant, and equipment assets for entities in the airline industry. It includes guidance on:

1.  a
    
    The use of unit and group depreciation methods.
    
2.  b
    
    Rotable parts. [Rotable parts](https://asc.understandingaccounting.org/glossary/r/#rotable-parts "Rotable parts are normally repaired and reused, as opposed to those parts that are consumed in the operations (expendable parts).") relate to flight equipment.
    
3.  c
    
    [Airframe](https://asc.understandingaccounting.org/glossary/a/#airframe "The structure of an aircraft, excluding engines and accessories. The principal parts of the airframe of an airplane include the fuselage (the body), wings, empennage (the assembly of stabilizing and control surfaces at the tail), landing gear, and nacelles or pods (engine housings).") modifications. Airlines have undertaken major programs to modify interior configurations of certain aircraft types—including the reconfiguration and replacement of seats, galley equipment, and storage space—in response to market forces and passenger demands. Since deregulation, such changes have been more frequent.
    
4.  d
    
    Airframe and engine overhauls. As a result of overhaul requirements established by the Federal Aviation Administration, aircraft airframes and engines must be overhauled within specific intervals. The value and usefulness of an aircraft can be heavily dependent on its stage of overhaul. For accounting purposes, airframe and aircraft engine overhauls encompass all inspections or replacements of major components, which the civil air regulations require at specific maximum periodic intervals to recertify that the frame or engine is completely airworthy.

#### Purchase Incentives

##### [360-908-05-2](https://asc.understandingaccounting.org/asc/360/908/#360-908-05-2)

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Airlines frequently negotiate purchase incentives with aircraft manufacturers whereby, as an inducement to purchase a particular manufacturer's aircraft, the manufacturer will issue credits, which can be used for the purchase of [spare parts](https://asc.understandingaccounting.org/glossary/s/#spare-parts "Parts, appurtenances, and accessories of aircraft (other than aircraft engines and propellers), of aircraft engines (other than propellers), of propellers, or of appliances that are maintained for installation or use in an aircraft, aircraft engine, propeller, or appliance but that are not yet installed or attached.") but may not be applied as part of the purchase price of aircraft. Examples of other incentives are guaranteed trade-in values and purchase credits for flight crew training equipment (for example, flight simulators).