Property, Plant and Equipment Accounting Policy
Property, plant and equipment is valued at cost less accumulated depreciation and impairment losses. This also applies to property classified as investment property. Investment property consists of property held either to earn rentals or for capital appreciation or both and not used in production or for administrative purposes. The fair value disclosed for investment property is primarily based on a discounted cash flow approach except for certain cases which are based on appraisal values. If the costs of certain components of an item of property, plant and equipment are significant in relation to the total cost of the item, they are accounted for and depreciated separately.
Depreciation expense is recognized using the straight-line method. Residual values and useful lives are reviewed annually and, if expectations differ from previous estimates, adjusted accordingly. Costs of construction of qualifying assets, i.e. assets that require a substantial period of time to be ready for its intended use, include capitalized interest, which is amortized over the estimated useful life of the related asset. The following useful lives are assumed:
| Factory and office buildings |
20 to 50 years |
| Other buildings |
5 to 10 years |
| Technical machinery & equipment |
5 to 10 years |
| Furniture & office equipment |
generally 5 years |
| Equipment leased to others |
generally 3 to 5 years |
Source: Siemens AG, Annual Report
Property, Plant and Equipment Disclosure
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Siemens AG, Statement of Financial Position, Property, Plant and Equipment
USD $ in millions, translated from EUR €
Source: Based on data from Siemens AG Annual Reports
| Item |
Description |
The company |
| Technical 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. |
Siemens AG's technical machinery and equipment declined from 2009 to 2010 and from 2010 to 2011.
|
| Furniture and office 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. |
Siemens AG's furniture and office equipment declined from 2009 to 2010 and from 2010 to 2011.
|
| Equipment leased to others |
The amount of lessor property subject to or available for lease, at cost adjusted for any previously recognized impairment charges, by major property class, as of the balance sheet date. |
Siemens AG's equipment leased to others increased from 2009 to 2010 and from 2010 to 2011.
|
| Advances to suppliers and 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. |
Siemens AG's advances to suppliers and construction in progress increased from 2009 to 2010 but then declined significantly from 2010 to 2011.
|
| Total property, plant and equipment, gross carrying amount |
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. |
Siemens AG's total property, plant and equipment, gross carrying amount declined from 2009 to 2010 and from 2010 to 2011.
|
| Property, plant and equipment, net book value |
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. |
Siemens AG's property, plant and equipment, net book value declined from 2009 to 2010 and from 2010 to 2011.
|
Property, Plant and Equipment Ratios (Summary)
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Siemens AG, 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. |
Siemens AG's average age of depreciable property, plant and equipment deteriorated from 2009 to 2010 but then improved from 2010 to 2011 exceeding 2009 level.
|
| 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. |
Siemens AG's estimated total useful life of depreciable property, plant and equipment increased 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. |
Siemens AG's estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2009 to 2010 but then improved from 2010 to 2011 not reaching 2009 level.
|
| Estimated remaining life |
|
Siemens AG's estimated remaining life of depreciable property, plant and equipment declined from 2009 to 2010 but then increased from 2010 to 2011 exceeding 2009 level.
|
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. |
Siemens AG's average age of depreciable property, plant and equipment deteriorated from 2009 to 2010 but then improved from 2010 to 2011 exceeding 2009 level.
|
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. |
Siemens AG's estimated total useful life of depreciable property, plant and equipment increased 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. |
Siemens AG's estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2009 to 2010 but then improved from 2010 to 2011 not reaching 2009 level.
|
Estimated Remaining Life
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2011 Calculations
| Ratio |
Description |
The company |
| Estimated remaining life |
|
Siemens AG's estimated remaining life of depreciable property, plant and equipment declined from 2009 to 2010 but then increased from 2010 to 2011 exceeding 2009 level.
|
