Property, Plant and Equipment Accounting Policy
Property and equipment, consisting primarily of offshore drilling rigs and related equipment, represented approximately 64 percent of Transocean's total assets at December 31, 2011. The carrying amounts of these assets are based on estimates, assumptions and judgments relative to capitalized costs, useful lives and salvage values of Transocean's rigs. These estimates, assumptions and judgments reflect both historical experience and expectations regarding future industry conditions and operations. Transocean computes depreciation using the straight-line method after allowing for salvage values. Transocean capitalizes expenditures for renewals, replacements and improvements, and Transocean expenses maintenance and repair costs as incurred. Upon sale or other disposition of an asset, Transocean recognizes a net gain or loss on disposal of the asset, which is measured as the difference between the net carrying amount of the asset and the net proceeds received.
Estimated original useful lives of Transocean's drilling units range from 18 to 35 years, buildings and improvements range from 10 to 30 years and machinery and equipment range from four to 12 years. From time to time, Transocean may review the estimated remaining useful lives of drilling units, and Transocean may extend the useful life when events and circumstances indicate a drilling unit can operate beyond its remaining useful life. During 2011, Transocean adjusted the useful lives for two rigs, extending the estimated useful lives from between 20 and 30 years to between 23 and 38 years. During 2010, Transocean adjusted the useful lives for five rigs, extending the estimated useful lives from between 20 and 36 years to between 25 and 39 years. During 2009, Transocean adjusted the useful lives for 10 rigs, extending the estimated useful lives from between 30 and 35 years to between 33 and 50 years. Transocean deemed the life extensions appropriate for each of these rigs based on the respective contracts under which the rigs were operating and the additional life-extending work, upgrades and inspections Transocean performed on the rigs. For each of the years ended December 31, 2011, 2010 and 2009, the changes in estimated useful lives of these rigs resulted in a reduction in depreciation expense of $2 million ($0.01 per diluted share from continuing operations), $23 million ($0.07 per diluted share from continuing operations) and $23 million ($0.07 per diluted share from continuing operations), respectively, which had no tax effect for any period.
Source: Transocean Ltd., Annual Report
Property, Plant and Equipment Disclosure
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Transocean Ltd., Statement of Financial Position, Property, Plant and Equipment
Source: Based on data from Transocean Ltd. Annual Reports
| Item |
Description |
The company |
| Property and equipment, 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. |
Transocean Ltd.'s property and equipment, cost declined from 2009 to 2010 but then increased from 2010 to 2011 exceeding 2009 level.
|
| Property 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. |
Transocean Ltd.'s property and equipment, net declined from 2009 to 2010 but then increased from 2010 to 2011 not reaching 2009 level.
|
Property, Plant and Equipment Ratios (Summary)
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Transocean Ltd., 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. |
Transocean Ltd.'s average age of depreciable property, plant and equipment deteriorated 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. |
Transocean Ltd.'s average age of depreciable property, plant and equipment deteriorated from 2009 to 2010 and from 2010 to 2011.
|
