Property, Plant and Equipment Accounting Policy
Property, plant and equipment are stated at cost. Johnson & Johnson utilizes the straight-line method of depreciation over the estimated useful lives of the assets:
|
Building and building equipment |
20 — 40 years |
|
Land and leasehold improvements |
10 — 20 years |
|
Machinery and equipment |
2 — 13 years |
Johnson & Johnson capitalizes certain computer software and development costs, included in machinery and equipment, when incurred in connection with developing or obtaining computer software for internal use. Capitalized software costs are amortized over the estimated useful lives of the software, which generally range from 3 to 8 years.
Johnson & Johnson reviews long-lived assets to assess recoverability using undiscounted cash flows. When certain events or changes in operating or economic conditions occur, an impairment assessment may be performed on the recoverability of the carrying value of these assets. If the asset is determined to be impaired, the loss is measured based on the difference between the asset’s fair value and its carrying value. If quoted market prices are not available, Johnson & Johnson will estimate fair value using a discounted value of estimated future cash flows.
Source: Johnson & Johnson, Annual Report
Property, Plant and Equipment Disclosure
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Johnson & Johnson, Statement of Financial Position, Property, Plant and Equipment
Source: Based on data from Johnson & Johnson Annual Reports
| Item |
Description |
The company |
| Land and land improvements |
Real estate assets held for productive use and depreciable assets that are an addition or improvement to real estate held for productive use. |
Johnson & Johnson's land and land improvements declined from 2008 to 2009 but then slightly increased from 2009 to 2010.
|
| Buildings and building equipment |
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. |
Johnson & Johnson's buildings and building equipment increased from 2008 to 2009 and from 2009 to 2010.
|
| Machinery and equipment |
Carrying amount as of the balance sheet date of long-lived, depreciable asset used in production process to produce goods and services. |
Johnson & Johnson's machinery and equipment increased from 2008 to 2009 and from 2009 to 2010.
|
| 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. |
Johnson & Johnson's construction in progress declined from 2008 to 2009 but then slightly increased from 2009 to 2010.
|
| Total property, plant and equipment, gross |
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. |
Johnson & Johnson's total property, plant and equipment, gross increased from 2008 to 2009 and from 2009 to 2010.
|
| Property, plant and equipment, net |
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. |
Johnson & Johnson's property, plant and equipment, net increased from 2008 to 2009 but then slightly declined from 2009 to 2010 not reaching 2008 level.
|
Property, Plant and Equipment Ratios (Summary)
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Johnson & Johnson, 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. |
Johnson & Johnson'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. |
Johnson & Johnson's estimated total useful life of depreciable property, plant and equipment increased from 2008 to 2009 but then slightly declined from 2009 to 2010.
|
| Estimated time elapsed since purchase |
The approximate age in years of a company's fixed assets. Useful for comparison purposes. |
Johnson & Johnson's estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2008 to 2009 and from 2009 to 2010.
|
| Estimated remaining life |
|
Johnson & Johnson'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. |
Johnson & Johnson'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. |
Johnson & Johnson's estimated total useful life of depreciable property, plant and equipment increased from 2008 to 2009 but then slightly declined 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. |
Johnson & Johnson's estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2008 to 2009 and from 2009 to 2010.
|
Estimated Remaining Life
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2010 Calculations
| Ratio |
Description |
The company |
| Estimated remaining life |
|
Johnson & Johnson's estimated remaining life of depreciable property, plant and equipment declined from 2008 to 2009 and from 2009 to 2010.
|
