Material Detail

In the June 7-8, 2014 weekend edition of The Wall Street Journal, an article entitled “Accounting Errors Hit Hertz Hard” caught auto industry analyst Abby Devins’s attention. Devins recalled that Hertz had hinted in March about the possibility of having to restate its 2011 financial statements, but by June the situation appeared worse than previously anticipated. Keenly aware that car rental companies like Hertz provided a significant source of steady demand for automotive manufacturers, Devins was curious whether Hertz’s accounting issues could be related in some way to its large rental fleet and what impact this might have on the company’s future vehicle acquisition plans.

Learning Objective:

To understand the terminology and mechanics of depreciation as well as the economic intuition underlying its implementation.

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