Home Depot Inc. (HD) | Analysis of Property, Plant and Equipment
Property, Plant and Equipment Accounting Policy
Depreciation and Amortization
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 |
Capitalized Software Costs
Home Depot capitalizes certain costs related to the acquisition and development of software and amortizes these costs using the straight-line method over the estimated useful life of the software, which is three to six years. These costs are included in Furniture, Fixtures and Equipment. Certain development costs not meeting the criteria for capitalization are expensed as incurred.
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
| Feb 3, 2013 | Jan 29, 2012 | Jan 30, 2011 | Jan 31, 2010 | Feb 1, 2009 | Feb 3, 2008 | ||
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| Land | ![]() |
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| Buildings | ![]() |
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| Furniture, fixtures and equipment | ![]() |
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| Leasehold improvements | ![]() |
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| Construction in progress | ![]() |
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| Capital leases | ![]() |
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| Property and equipment, at cost | ![]() |
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| Accumulated depreciation and amortization | ![]() |
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| Net property and equipment | ![]() |
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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 declined from 2011 to 2012 but then slightly increased from 2012 to 2013. |
| 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 2011 to 2012 and from 2012 to 2013. |
| 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 2011 to 2012 but then declined significantly from 2012 to 2013. |
| 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 declined from 2011 to 2012 but then increased from 2012 to 2013 exceeding 2011 level. |
| 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 increased from 2011 to 2012 but then declined significantly from 2012 to 2013. |
| 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 2011 to 2012 and from 2012 to 2013. |
| 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 2011 to 2012 but then slightly declined from 2012 to 2013 not reaching 2011 level. |
| 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 2011 to 2012 and from 2012 to 2013. |
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Property, Plant and Equipment Ratios (Summary)
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Home Depot Inc., 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. | Home Depot Inc.'s average age of depreciable property, plant and equipment deteriorated from 2011 to 2012 and from 2012 to 2013. |
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Average Age
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2013 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 2011 to 2012 and from 2012 to 2013. |





