Home Depot Inc. (HD) | Analysis of Property, Plant and Equipment

Property, Plant and Equipment Accounting Policy

Depreciation and Amortization

Home Depot's Buildings, Furniture, Fixtures and Equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Leasehold Improvements are amortized using the straight-line method over the original term of the lease or the useful life of the improvement, whichever is shorter. Home Depot's Property and Equipment is depreciated using the following estimated useful lives:

	Life
Buildings	5 – 45 years
Furniture, Fixtures and Equipment	2 – 20 years
Leasehold Improvements	5 – 45 years

Capitalized Software Costs

Home Depot capitalizes certain costs related to the acquisition and development of software and amortizes these costs using the straight-line method over the estimated useful life of the software, which is three to six years. These costs are included in Furniture, Fixtures and Equipment in the accompanying Consolidated Balance Sheets. Certain development costs not meeting the criteria for capitalization are expensed as incurred.

Source: Home Depot Inc., Annual Report

Property, Plant and Equipment Disclosure

Home Depot Inc., Statement of Financial Position, Property, Plant and Equipment

Source: Based on data from Home Depot 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.	Home Depot Inc.'s land increased from 2010 to 2011 but then slightly declined from 2011 to 2012.
Buildings	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.	Home Depot Inc.'s buildings increased from 2010 to 2011 and from 2011 to 2012.
Furniture, fixtures and 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.	Home Depot Inc.'s furniture, fixtures and equipment increased 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.	Home Depot Inc.'s leasehold improvements declined from 2010 to 2011 and from 2011 to 2012.
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.	Home Depot Inc.'s construction in progress increased from 2010 to 2011 and from 2011 to 2012.
Capital leases	The total gross amount of assets subject to a lease meeting the criteria for capitalization.	Home Depot Inc.'s capital leases increased from 2010 to 2011 and from 2011 to 2012.
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.	Home Depot Inc.'s property and equipment, at cost increased from 2010 to 2011 and from 2011 to 2012.
Net property and equipment	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.	Home Depot Inc.'s net property and equipment declined from 2010 to 2011 and from 2011 to 2012.

Property, Plant and Equipment Ratios (Summary)

Home Depot 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.	Home Depot Inc.'s average age of depreciable property, plant and equipment deteriorated from 2010 to 2011 and from 2011 to 2012.

Average Age

2012 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.	Home Depot Inc.'s average age of depreciable property, plant and equipment deteriorated from 2010 to 2011 and from 2011 to 2012.