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Home Depot Inc. (HD) | Analysis of Property, Plant and Equipment

Property, Plant and Equipment Accounting Policy

Home Depot's Buildings, Furniture, Fixtures and Equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Leasehold Improvements are amortized using the straight-line method over the original term of the lease or the useful life of the improvement, whichever is shorter. Home Depot's Property and Equipment is depreciated using the following estimated useful lives:

Life
Buildings
5 – 45 years
Furniture, Fixtures and Equipment
2 – 20 years
Leasehold Improvements
5 – 45 years

Source: Home Depot Inc., Annual Report

Property, Plant and Equipment Disclosure

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Home Depot Inc., Statement of Financial Position, Property, Plant and Equipment

USD $ in millions

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Source: Based on data from Home Depot Inc. Annual Reports

Item Description The company
Land Carrying amount as of the balance sheet date of real estate held for productive use. This excludes land held for sale. Home Depot Inc.'s land increased from 2009 to 2010 and from 2010 to 2011.
Buildings Carrying amount as of the balance sheet date of long-lived, depreciable assets that include building structures held for productive use including any addition, improvement, or renovation to the structure, such as interior masonry, interior flooring, electrical, and plumbing. Home Depot Inc.'s buildings increased from 2009 to 2010 and from 2010 to 2011.
Furniture, fixtures and equipment Carrying amount at the balance sheet date for long-lived, depreciable asset commonly used in offices and stores. Examples include desks, chairs, and store fixtures. Home Depot Inc.'s furniture, fixtures and equipment increased from 2009 to 2010 and from 2010 to 2011.
Leasehold improvements Carrying amount at the balance sheet date of long-lived, depreciable asset that is an addition or improvement to assets held under lease arrangement. Home Depot Inc.'s leasehold improvements increased from 2009 to 2010 but then slightly declined from 2010 to 2011.
Construction in progress 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. Home Depot Inc.'s construction in progress declined from 2009 to 2010 but then increased from 2010 to 2011 exceeding 2009 level.
Capital leases The total gross amount of assets subject to a lease meeting the criteria for capitalization. Home Depot Inc.'s capital leases increased from 2009 to 2010 and from 2010 to 2011.
Property and equipment, at 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. Home Depot Inc.'s property and equipment, at cost increased from 2009 to 2010 and from 2010 to 2011.
Net property and equipment 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. Home Depot Inc.'s net property and equipment declined from 2009 to 2010 and from 2010 to 2011.

Property, Plant and Equipment Ratios (Summary)

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Home Depot Inc., Property, Plant and Equipment Ratios

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    Jan 30, 2011 Jan 31, 2010 Feb 1, 2009 Feb 3, 2008 Jan 28, 2007 Jan 29, 2006
Average age % % % % % %
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. Home Depot Inc.'s average age of depreciable property, plant and equipment deteriorated from 2009 to 2010 and from 2010 to 2011.

Average Age

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    Jan 30, 2011 Jan 31, 2010 Feb 1, 2009 Feb 3, 2008 Jan 28, 2007 Jan 29, 2006
  Selected Financial Data (USD $ in millions)
Accumulated depreciation and amortization
Property and equipment, at cost
Land
  Ratio
Average age1 % % % % % %

2011 Calculations

1 Average age = 100 × Accumulated depreciation and amortization ÷ (Property and equipment, at cost – Land)
= 100 × ÷ () = %

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. Home Depot Inc.'s average age of depreciable property, plant and equipment deteriorated from 2009 to 2010 and from 2010 to 2011.

February 8, 2012

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