Verizon Communications Inc. (VZ) | Property, Plant and Equipment

Property, Plant and Equipment Accounting Policy

Verizon records plant, property and equipment at cost. Plant, property and equipment of 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 related lease, calculated from the time the asset was placed in service.

When the depreciable assets of Verizon's 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 for average useful lives for 2012, 2011, and 2010. 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 increases in depreciation expense of $0.4 billion and $0.3 billion in 2011 and 2010, 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

Verizon Communications Inc., Statement of Financial Position, Property, Plant and Equipment

USD $ in millions

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Land	859	862	865	925	815
Buildings and equipment	22,909	21,969	21,064	21,492	20,440
Central office and other network equipment	113,262	107,322	102,547	–	–
Cable, poles and conduit	53,761	67,190	67,539	–	–
Leasehold improvements	5,404	5,030	4,816	4,694	4,155
Work in progress	4,126	3,417	4,375	3,331	1,279
Furniture, vehicles and other	9,254	9,836	10,449	198,076	188,916
Plant, property and equipment, at cost	209,575	215,626	211,655	228,518	215,605
Accumulated depreciation	(120,933)	(127,192)	(123,944)	(137,052)	(129,059)
Plant, property and equipment, less accumulated depreciation	88,642	88,434	87,711	91,466	86,546

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 2010 to 2011 and from 2011 to 2012.
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 2010 to 2011 and from 2011 to 2012.
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 declined from 2010 to 2011 but then increased from 2011 to 2012 not reaching 2010 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 increased from 2010 to 2011 but then declined significantly from 2011 to 2012.
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 increased from 2010 to 2011 and from 2011 to 2012.

Property, Plant and Equipment Ratios (Summary)

Verizon Communications Inc., Property, Plant and Equipment Ratios

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Average age	57.94%	59.22%	58.80%	60.22%	60.09%
Estimated total useful life (years)	14	14	14	16	16
Estimated age, time elapsed since purchase (years)	8	8	8	9	10
Estimated remaining life (years)	6	6	6	6	7

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 deteriorated from 2010 to 2011 but then improved from 2011 to 2012 exceeding 2010 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.	Verizon Communications Inc.'s estimated total useful life of depreciable property, plant and equipment declined from 2010 to 2011 and from 2011 to 2012.
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 2010 to 2011 and from 2011 to 2012.
Estimated remaining life		Verizon Communications Inc.'s estimated remaining life of depreciable property, plant and equipment declined from 2010 to 2011 but then slightly increased from 2011 to 2012.

Average Age

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Selected Financial Data (USD $ in millions)
Accumulated depreciation	120,933	127,192	123,944	137,052	129,059
Plant, property and equipment, at cost	209,575	215,626	211,655	228,518	215,605
Land	859	862	865	925	815
Ratio
Average age¹	57.94%	59.22%	58.80%	60.22%	60.09%

2012 Calculations

¹ Average age = 100 × Accumulated depreciation ÷ (Plant, property and equipment, at cost – Land)
= 100 × 120,933 ÷ (209,575 – 859) = 57.94%

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 deteriorated from 2010 to 2011 but then improved from 2011 to 2012 exceeding 2010 level.

Estimated Total Useful Life

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Selected Financial Data (USD $ in millions)
Plant, property and equipment, at cost	209,575	215,626	211,655	228,518	215,605
Land	859	862	865	925	815
Depreciation expense	14,920	14,991	14,593	14,562	13,182
Ratio
Estimated total useful life (years)¹	14	14	14	16	16

2012 Calculations

¹ Estimated total useful life (years) = (Plant, property and equipment, at cost – Land) ÷ Depreciation expense
= (209,575 – 859) ÷ 14,920 = 14

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 2010 to 2011 and from 2011 to 2012.

Estimated Age, Time Elapsed Since Purchase

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Selected Financial Data (USD $ in millions)
Accumulated depreciation	120,933	127,192	123,944	137,052	129,059
Depreciation expense	14,920	14,991	14,593	14,562	13,182
Ratio
Time elapsed since purchase (years)¹	8	8	8	9	10

2012 Calculations

¹ Time elapsed since purchase (years) = Accumulated depreciation ÷ Depreciation expense
= 120,933 ÷ 14,920 = 8

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 2010 to 2011 and from 2011 to 2012.

Estimated Remaining Life

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Selected Financial Data (USD $ in millions)
Plant, property and equipment, less accumulated depreciation	88,642	88,434	87,711	91,466	86,546
Land	859	862	865	925	815
Depreciation expense	14,920	14,991	14,593	14,562	13,182
Ratio
Estimated remaining life (years)¹	6	6	6	6	7

2012 Calculations

¹ Estimated remaining life (years) = (Plant, property and equipment, less accumulated depreciation – Land) ÷ Depreciation expense
= (88,642 – 859) ÷ 14,920 = 6

Ratio	Description	The company
Estimated remaining life		Verizon Communications Inc.'s estimated remaining life of depreciable property, plant and equipment declined from 2010 to 2011 but then slightly increased from 2011 to 2012.