Property, Plant and Equipment Accounting Policy
Property, plant and equipment (PP&E) is stated at the cost of purchase or construction less provisions for depreciation and impairment. Financing costs are capitalised within the cost of qualifying assets in construction.
Depreciation is calculated to write off the cost less residual value of PP&E, excluding freehold land, using the straight-line basis over the expected useful life. Residual values and lives are reviewed, and where appropriate adjusted, annually. The normal expected useful lives of the major categories of PP&E are:
|
Freehold buildings
|
|
20 to 50 years |
|
Leasehold land and buildings
|
|
Lease term or 20 to 50 years |
|
Plant and machinery
|
|
10 to 20 years |
|
Fixtures and equipment
|
|
3 to 10 years |
On disposal of PP&E, the cost and related accumulated depreciation and impairments are removed from the financial statements and the net amount, less any proceeds, is taken to the income statement.
Source: GlaxoSmithKline PLC, Annual Report
Property, Plant and Equipment Disclosure
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GlaxoSmithKline PLC, Statement of Financial Position, Property, Plant and Equipment
USD $ in millions, translated from GBP £
Source: Based on data from GlaxoSmithKline PLC Annual Reports
| Item |
Description |
The company |
| 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. |
GlaxoSmithKline PLC's property, plant and equipment, cost increased from 2008 to 2009 but then slightly declined from 2009 to 2010.
|
| 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. |
GlaxoSmithKline PLC's property, plant and equipment, net book value increased from 2008 to 2009 but then declined significantly from 2009 to 2010.
|
Property, Plant and Equipment Ratios (Summary)
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GlaxoSmithKline PLC, Property, Plant and Equipment Ratios
| 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. |
GlaxoSmithKline PLC's average age of depreciable property, plant and equipment deteriorated from 2008 to 2009 and from 2009 to 2010.
|
| 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. |
GlaxoSmithKline PLC's estimated total useful life of depreciable property, plant and equipment declined from 2008 to 2009 and from 2009 to 2010.
|
| Estimated time elapsed since purchase |
The approximate age in years of a company's fixed assets. Useful for comparison purposes. |
GlaxoSmithKline PLC's estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2008 to 2009 but then slightly deteriorated from 2009 to 2010.
|
| Estimated remaining life |
|
GlaxoSmithKline PLC's estimated remaining life of depreciable property, plant and equipment declined from 2008 to 2009 and from 2009 to 2010.
|
Average Age
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2010 Calculations
| 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. |
GlaxoSmithKline PLC's average age of depreciable property, plant and equipment deteriorated from 2008 to 2009 and from 2009 to 2010.
|
Estimated Total Useful Life
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2010 Calculations
| 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. |
GlaxoSmithKline PLC's estimated total useful life of depreciable property, plant and equipment declined from 2008 to 2009 and from 2009 to 2010.
|
Estimated Age, Time Elapsed Since Purchase
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2010 Calculations
| Ratio |
Description |
The company |
| Estimated time elapsed since purchase |
The approximate age in years of a company's fixed assets. Useful for comparison purposes. |
GlaxoSmithKline PLC's estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2008 to 2009 but then slightly deteriorated from 2009 to 2010.
|
Estimated Remaining Life
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2010 Calculations
| Ratio |
Description |
The company |
| Estimated remaining life |
|
GlaxoSmithKline PLC's estimated remaining life of depreciable property, plant and equipment declined from 2008 to 2009 and from 2009 to 2010.
|
