Property, Plant and Equipment Accounting Policy
Depreciation
Property, plant and equipment are stated at historical cost and depreciated by the straight-line method over the estimated useful lives of the assets. Machinery and equipment are depreciated over periods ranging from 3 to 15 years, and buildings and building improvements over periods up to 40 years. Depreciation expense for 2011, 2010 and 2009, was $895 million, $844 million and $779 million, respectively.
Software costs
PMI capitalizes certain computer software and software development costs incurred in connection with developing or obtaining computer software for internal use. Capitalized software costs are included in property, plant and equipment on PMI's consolidated balance sheets and are amortized on a straight-line basis over the estimated useful lives of the software, which do not exceed five years.
Source: Philip Morris International Inc., Annual Report
Property, Plant and Equipment Disclosure
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Philip Morris International Inc., Statement of Financial Position, Property, Plant and Equipment
Source: Based on data from Philip Morris International Inc. 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. |
Philip Morris International Inc.'s land and land improvements increased from 2009 to 2010 but then slightly declined from 2010 to 2011.
|
| 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. |
Philip Morris International Inc.'s buildings and building equipment 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. |
Philip Morris International Inc.'s machinery and equipment increased from 2009 to 2010 and 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. |
Philip Morris International Inc.'s construction in progress declined from 2009 to 2010 but then increased from 2010 to 2011 exceeding 2009 level.
|
| Property, plant 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. |
Philip Morris International Inc.'s property, plant and equipment, at cost increased from 2009 to 2010 and from 2010 to 2011.
|
| Property, plant and equipment, less accumulated depreciation |
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. |
Philip Morris International Inc.'s property, plant and equipment, less accumulated depreciation increased from 2009 to 2010 but then declined significantly from 2010 to 2011.
|
Property, Plant and Equipment Ratios (Summary)
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Philip Morris International 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. |
Philip Morris International Inc.'s average age of depreciable property, plant and equipment deteriorated from 2009 to 2010 and from 2010 to 2011.
|
| 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. |
Philip Morris International Inc.'s estimated total useful life of depreciable property, plant and equipment declined from 2009 to 2010 and from 2010 to 2011.
|
| Estimated time elapsed since purchase |
The approximate age in years of a company's fixed assets. Useful for comparison purposes. |
Philip Morris International Inc.'s estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2009 to 2010 but then slightly deteriorated from 2010 to 2011.
|
| Estimated remaining life |
|
Philip Morris International Inc.'s estimated remaining life of depreciable property, plant and equipment declined from 2009 to 2010 and 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. |
Philip Morris International Inc.'s average age of depreciable property, plant and equipment deteriorated from 2009 to 2010 and from 2010 to 2011.
|
Estimated Total Useful Life
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2011 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. |
Philip Morris International Inc.'s estimated total useful life of depreciable property, plant and equipment declined from 2009 to 2010 and from 2010 to 2011.
|
Estimated Age, Time Elapsed Since Purchase
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2011 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. |
Philip Morris International Inc.'s estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2009 to 2010 but then slightly deteriorated from 2010 to 2011.
|
Estimated Remaining Life
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2011 Calculations
| Ratio |
Description |
The company |
| Estimated remaining life |
|
Philip Morris International Inc.'s estimated remaining life of depreciable property, plant and equipment declined from 2009 to 2010 and from 2010 to 2011.
|
