Property, Plant and Equipment Accounting Policy
Verizon records plant, property and equipment at cost. Verizon's local telephone operations' depreciation expense is principally based on the composite group remaining life method and straight-line composite rates. This method provides for the recognition of the cost of the remaining net investment in local telephone plant, less anticipated net salvage value, over the remaining asset lives. This method requires the periodic revision of depreciation rates. Plant, property and equipment of other wireline and wireless operations are generally depreciated on a straight-line basis.
Leasehold improvements are amortized over the shorter of the estimated life of the improvement or the remaining term of the lease in which the asset is located, calculated from the time the asset was placed in service.
When Verizon replaces, retires or otherwise disposes of depreciable plant used in local telephone network, Verizon deducts the carrying amount of such plant from the respective accounts and charge it to accumulated depreciation. When the depreciable assets of Verizon's other wireline and wireless operations are retired or otherwise disposed of, the related cost and accumulated depreciation are deducted from the plant accounts, and any gains or losses on disposition are recognized in income.
Verizon capitalizes and depreciates network software purchased or developed along with related plant assets. Verizon also capitalizes interest associated with the acquisition or construction of network-related assets. Capitalized interest is reported as a reduction in interest expense and depreciated as part of the cost of the network-related assets.
In connection with ongoing review of the estimated remaining average useful lives of plant, property and equipment at local telephone operations, Verizon determined that there were no changes necessary to average useful lives for 2011 and 2010. Verizon determined effective January 1, 2009 that the average useful lives of fiber cable (not including undersea cable) would be increased to 25 years from 20 to 25 years and the average useful lives of copper cable would be changed to 15 years from 13 to 18 years. These changes to average useful lives did not have a significant impact on depreciation expense. In connection with ongoing review of the estimated remaining average useful lives of plant, property and equipment at wireless operations, Verizon determined that changes were necessary to the remaining estimated useful lives as a result of technology upgrades, enhancements, and planned retirements. These changes resulted in an increase in depreciation expense of $0.4 billion in 2011, and $0.3 billion in 2010 and 2009, respectively. While the timing and extent of current deployment plans are subject to ongoing analysis and modification, Verizon believes the current estimates of useful lives are reasonable.
Source: Verizon Communications Inc., Annual Report
Property, Plant and Equipment Disclosure
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Verizon Communications Inc., Statement of Financial Position, Property, Plant and Equipment
Source: Based on data from Verizon Communications Inc. Annual Reports
| Item |
Description |
The company |
| Land |
Carrying amount as of the balance sheet date of real estate held for productive use. This excludes land held for sale. |
Verizon Communications Inc.'s land declined from 2009 to 2010 and from 2010 to 2011.
|
| Leasehold improvements |
Carrying amount at the balance sheet date of long-lived, depreciable asset that is an addition or improvement to assets held under lease arrangement. |
Verizon Communications Inc.'s leasehold improvements increased from 2009 to 2010 and from 2010 to 2011.
|
| Work 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. |
Verizon Communications Inc.'s work in progress increased from 2009 to 2010 but then slightly declined from 2010 to 2011 not reaching 2009 level.
|
| Plant, property 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. |
Verizon Communications Inc.'s plant, property and equipment, at cost declined from 2009 to 2010 but then slightly increased from 2010 to 2011.
|
| Plant, property 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. |
Verizon Communications Inc.'s plant, property and equipment, less accumulated depreciation declined from 2009 to 2010 but then slightly increased from 2010 to 2011.
|
Property, Plant and Equipment Ratios (Summary)
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Verizon Communications 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. |
Verizon Communications Inc.'s average age of depreciable property, plant and equipment improved from 2009 to 2010 but then slightly deteriorated 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. |
Verizon Communications 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. |
Verizon Communications Inc.'s estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2009 to 2010 and from 2010 to 2011.
|
| Estimated remaining life |
|
Verizon Communications 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. |
Verizon Communications Inc.'s average age of depreciable property, plant and equipment improved from 2009 to 2010 but then slightly deteriorated 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. |
Verizon Communications 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. |
Verizon Communications Inc.'s estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2009 to 2010 and from 2010 to 2011.
|
Estimated Remaining Life
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2011 Calculations
| Ratio |
Description |
The company |
| Estimated remaining life |
|
Verizon Communications Inc.'s estimated remaining life of depreciable property, plant and equipment declined from 2009 to 2010 and from 2010 to 2011.
|
