Property, Plant and Equipment Accounting Policy
Property, plant and equipment is recorded at cost. Additions and improvements are capitalized; these include all material, labor, and engineering costs to design, install or improve the asset and interest costs on construction projects. Such costs are not depreciated until the assets are placed in service. Routine repairs and maintenance are expensed as incurred. The cost of plant and equipment is depreciated using the straight-line method over the estimated useful life of the asset — weighted-average periods of approximately 25 years for buildings, 10 years for machinery and equipment and seven years for software. In compliance with the Property, Plant and Equipment topic of the ASC, long-lived assets are reviewed for impairment whenever in management’s judgment conditions indicate a possible loss. Such impairment tests compare estimated undiscounted cash flows to the recorded value of the asset. If an impairment is indicated, the asset is written down to its fair value or, if fair value is not readily determinable, to an estimated fair value based on discounted cash flows. Based on recent changes in the Roundup business, Monsanto performed an impairment test on the long-lived assets in the Roundup and other glyphosate-based products reporting unit’s asset group. The test indicated no impairment during fiscal year 2010. There were no indications that an impairment test was needed in fiscal year 2011.
Monsanto follows the Asset Retirement and Environmental Obligations topic of the ASC, which addresses financial accounting for and reporting of costs and obligations associated with the retirement of tangible long-lived assets. Monsanto has asset retirement obligations with carrying amounts totaling $71 million and $65 million as of Aug. 31, 2011, and Aug. 31, 2010, respectively, primarily relating to its manufacturing facilities. The change in carrying value as of Aug. 31, 2011, consisted of $4 million for accretion expense offset by $2 million in increased costs.
Source: Monsanto Co., Annual Report
Property, Plant and Equipment Disclosure
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Monsanto Co., Statement of Financial Position, Property, Plant and Equipment
Source: Based on data from Monsanto Co. Annual Reports
| Item |
Description |
The company |
| Land and improvements |
Real estate assets held for productive use and depreciable assets that are an addition or improvement to real estate held for productive use. |
Monsanto Co.'s land and improvements increased from 2009 to 2010 and from 2010 to 2011.
|
| Buildings and improvements |
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. |
Monsanto Co.'s buildings and improvements increased from 2009 to 2010 and from 2010 to 2011.
|
| 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. |
Monsanto Co.'s machinery and equipment increased from 2009 to 2010 and from 2010 to 2011.
|
| Construction in progress and other |
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. |
Monsanto Co.'s construction in progress and other increased from 2009 to 2010 but then declined significantly from 2010 to 2011.
|
| 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. |
Monsanto Co.'s property, plant and equipment, gross increased from 2009 to 2010 and from 2010 to 2011.
|
| 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. |
Monsanto Co.'s property, plant and equipment, net increased from 2009 to 2010 and from 2010 to 2011.
|
Property, Plant and Equipment Ratios (Summary)
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Monsanto Co., 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. |
Monsanto Co.'s average age of depreciable property, plant and equipment improved from 2009 to 2010 but then deteriorated significantly from 2010 to 2011.
|
Average Age
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2011 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. |
Monsanto Co.'s average age of depreciable property, plant and equipment improved from 2009 to 2010 but then deteriorated significantly from 2010 to 2011.
|
