Procter & Gamble Co. (PG) | Analysis of Property, Plant and Equipment

Property, Plant and Equipment Accounting Policy

Property, plant and equipment is recorded at cost reduced by accumulated depreciation. Depreciation expense is recognized over the assets' estimated useful lives using the straight-line method. Machinery and equipment includes office furniture and fixtures (15-year life), computer equipment and capitalized software (3- to 5-year lives) and manufacturing equipment (3- to 20-year lives). Buildings are depreciated over an estimated useful life of 40 years. Estimated useful lives are periodically reviewed and, when appropriate, changes are made prospectively. When certain events or changes in operating conditions occur, asset lives may be adjusted and an impairment assessment may be performed on the recoverability of the carrying amounts.

Source: Procter & Gamble Co., Annual Report

Property, Plant and Equipment Disclosure

Procter & Gamble Co., Statement of Financial Position, Property, Plant and Equipment

Source: Based on data from Procter & Gamble Co. Annual Reports

Item	Description	The company
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.	Procter & Gamble Co.'s buildings increased from 2009 to 2010 and from 2010 to 2011.
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.	Procter & Gamble Co.'s machinery and equipment increased from 2009 to 2010 and from 2010 to 2011.
Land	Carrying amount as of the balance sheet date of real estate held for productive use. This excludes land held for sale.	Procter & Gamble Co.'s land declined from 2009 to 2010 but then increased from 2010 to 2011 exceeding 2009 level.
Property, plant and equipment, gross	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.	Procter & Gamble Co.'s property, plant and equipment, gross increased from 2009 to 2010 and from 2010 to 2011.
Net property, plant 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.	Procter & Gamble Co.'s net property, plant and equipment declined from 2009 to 2010 but then increased from 2010 to 2011 exceeding 2009 level.

Property, Plant and Equipment Ratios (Summary)

Procter & Gamble Co., 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.	Procter & Gamble Co.'s average age of depreciable property, plant and equipment deteriorated from 2009 to 2010 and from 2010 to 2011.

Average Age

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.	Procter & Gamble Co.'s average age of depreciable property, plant and equipment deteriorated from 2009 to 2010 and from 2010 to 2011.