AstraZeneca PLC (AZN) | Property, Plant and Equipment

Property, Plant and Equipment Accounting Policy

AstraZeneca's policy is to write off the difference between the cost of each item of property, plant and equipment and its residual value over its estimated useful life on a straight-line basis. Assets under construction are not depreciated.

Reviews are made annually of the estimated remaining lives and residual values of individual productive assets, taking account of commercial and technological obsolescence as well as normal wear and tear. Under this policy it becomes impractical to calculate average asset lives exactly. However, the total lives range from approximately 10 to 50 years for buildings, and three to 13 years for plant and equipment. All items of property, plant and equipment are tested for impairment when there are indications that the carrying value may not be recoverable. Any impairment losses are recognised immediately in profit.

Source: AstraZeneca PLC, Annual Report

Property, Plant and Equipment Disclosure

AstraZeneca PLC, Statement of Financial Position, Property, Plant and Equipment

USD $ in millions

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Land and buildings	5,850	5,911	5,699	5,336	5,217
Plant and equipment	8,645	8,779	9,293	8,803	8,534
Assets in course of construction	576	620	591	1,029	863
Property, plant and equipment, cost	15,071	15,310	15,583	15,168	14,614
Accumulated depreciation	(8,982)	(8,885)	(8,626)	(7,861)	(7,571)
Property, plant and equipment, net book value	6,089	6,425	6,957	7,307	7,043

Source: Based on data from AstraZeneca PLC Annual Reports

Item	Description	The company
Plant and equipment	Carrying amount as of the balance sheet date of long-lived, depreciable asset used in production process to produce goods and services.	AstraZeneca PLC's plant and equipment declined from 2010 to 2011 and from 2011 to 2012.
Assets in course of construction	Carrying amount at the balance sheet date of long-lived asset under construction that include construction costs to date on capital projects that have not been completed and assets being constructed that are not ready to be placed into service.	AstraZeneca PLC's assets in course of construction increased from 2010 to 2011 but then declined significantly from 2011 to 2012.
Property, plant and equipment, cost	Carrying amount at the balance sheet date for long-lived physical assets used in the normal conduct of business and not intended for resale. This can include land, physical structures, machinery, vehicles, furniture, computer equipment, construction in progress, and similar items. Amount does not include depreciation.	AstraZeneca PLC's property, plant and equipment, cost declined from 2010 to 2011 and from 2011 to 2012.
Property, plant and equipment, net book value	Tangible assets that are held by an entity for use in the production or supply of goods and services, for rental to others, or for administrative purposes and that are expected to provide economic benefit for more than one year; net of accumulated depreciation. Examples include land, buildings, and production equipment.	AstraZeneca PLC's property, plant and equipment, net book value declined from 2010 to 2011 and from 2011 to 2012.

Property, Plant and Equipment Ratios (Summary)

AstraZeneca PLC, Property, Plant and Equipment Ratios

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Average age	59.60%	58.03%	55.36%	51.83%	51.81%
Estimated total useful life (years)	15	14	14	16	12
Estimated age, time elapsed since purchase (years)	9	8	8	8	6
Estimated remaining life (years)	6	6	6	8	6

Ratio	Description	The company
Average age	As long as straight-line depreciation is used, this is an accurate estimate of asset age as a percentage of depreciable life. The relative age is a useful measure of whether the company's fixed asset base is old or new. Newer assets are likely to be more efficient.	AstraZeneca PLC's average age of depreciable property, plant and equipment deteriorated from 2010 to 2011 and from 2011 to 2012.
Estimated total useful life	Over longer time periods, this ratio is a useful measure of company's depreciation policy and can be used for comparisons with competitors.	AstraZeneca PLC's estimated total useful life of depreciable property, plant and equipment declined from 2010 to 2011 but then increased from 2011 to 2012 exceeding 2010 level.
Estimated time elapsed since purchase	The approximate age in years of a company's fixed assets. Useful for comparison purposes.	AstraZeneca PLC's estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2010 to 2011 and from 2011 to 2012.
Estimated remaining life		AstraZeneca PLC's estimated remaining life of depreciable property, plant and equipment declined from 2010 to 2011 but then slightly increased from 2011 to 2012.

Average Age

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Selected Financial Data (USD $ in millions)
Accumulated depreciation	8,982	8,885	8,626	7,861	7,571
Property, plant and equipment, cost	15,071	15,310	15,583	15,168	14,614
Ratio
Average age¹	59.60%	58.03%	55.36%	51.83%	51.81%

2012 Calculations

¹ Average age = 100 × Accumulated depreciation ÷ Property, plant and equipment, cost
= 100 × 8,982 ÷ 15,071 = 59.60%

Ratio	Description	The company
Average age	As long as straight-line depreciation is used, this is an accurate estimate of asset age as a percentage of depreciable life. The relative age is a useful measure of whether the company's fixed asset base is old or new. Newer assets are likely to be more efficient.	AstraZeneca PLC's average age of depreciable property, plant and equipment deteriorated from 2010 to 2011 and from 2011 to 2012.

Estimated Total Useful Life

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Selected Financial Data (USD $ in millions)
Property, plant and equipment, cost	15,071	15,310	15,583	15,168	14,614
Depreciation, charge for year and impairment	1,023	1,086	1,098	943	1,182
Ratio
Estimated total useful life (years)¹	15	14	14	16	12

2012 Calculations

¹ Estimated total useful life (years) = Property, plant and equipment, cost ÷ Depreciation, charge for year and impairment
= 15,071 ÷ 1,023 = 15

Ratio	Description	The company
Estimated total useful life	Over longer time periods, this ratio is a useful measure of company's depreciation policy and can be used for comparisons with competitors.	AstraZeneca PLC's estimated total useful life of depreciable property, plant and equipment declined from 2010 to 2011 but then increased from 2011 to 2012 exceeding 2010 level.

Estimated Age, Time Elapsed Since Purchase

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Selected Financial Data (USD $ in millions)
Accumulated depreciation	8,982	8,885	8,626	7,861	7,571
Depreciation, charge for year and impairment	1,023	1,086	1,098	943	1,182
Ratio
Time elapsed since purchase (years)¹	9	8	8	8	6

2012 Calculations

¹ Time elapsed since purchase (years) = Accumulated depreciation ÷ Depreciation, charge for year and impairment
= 8,982 ÷ 1,023 = 9

Ratio	Description	The company
Estimated time elapsed since purchase	The approximate age in years of a company's fixed assets. Useful for comparison purposes.	AstraZeneca PLC's estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2010 to 2011 and from 2011 to 2012.

Estimated Remaining Life

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Selected Financial Data (USD $ in millions)
Property, plant and equipment, net book value	6,089	6,425	6,957	7,307	7,043
Depreciation, charge for year and impairment	1,023	1,086	1,098	943	1,182
Ratio
Estimated remaining life (years)¹	6	6	6	8	6

2012 Calculations

¹ Estimated remaining life (years) = Property, plant and equipment, net book value ÷ Depreciation, charge for year and impairment
= 6,089 ÷ 1,023 = 6

Ratio	Description	The company
Estimated remaining life		AstraZeneca PLC's estimated remaining life of depreciable property, plant and equipment declined from 2010 to 2011 but then slightly increased from 2011 to 2012.