Stock Analysis on Net
Stock Analysis on Net
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Adobe Inc. (NASDAQ:ADBE)

Analysis of Property, Plant and Equipment

Advanced level

Accounting Policy on Property, Plant and Equipment

Adobe records property and equipment at cost less accumulated depreciation and amortization. Property and equipment are depreciated using the straight-line method over their estimated useful lives ranging from 1 to 20 years for computers and other equipment, which includes Adobe’s corporate jet, 1 to 6 years for furniture and fixtures, 5 to 20 years for building improvements and up to 40 years for buildings. Leasehold improvements are amortized using the straight-line method over the lesser of the remaining respective lease term or estimated useful lives ranging from 1 to 15 years.

Source: 10-K (filing date: 2020-01-21).


Property, Plant and Equipment Disclosure

Adobe Inc., balance sheet: property, plant and equipment

US$ in thousands

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Nov 29, 2019 Nov 30, 2018 Dec 1, 2017 Dec 2, 2016 Nov 27, 2015 Nov 28, 2014
Computers and equipment 1,424,368  1,239,033  1,128,264  1,051,937  940,057  855,218 
Buildings 482,797  485,024  490,665  382,364  398,468  320,410 
Building improvements 307,396  285,564  265,829  202,266  149,220  — 
Leasehold improvements 246,244  181,990  120,165  110,414  98,315  240,506 
Land 144,871  145,065  77,723  77,340  70,728  106,283 
Furniture and fixtures 143,739  121,206  115,273  94,243  89,434  82,385 
Server hardware under capital lease —  —  —  —  —  25,703 
Capital projects in-progress 112,232  23,026  5,575  7,648  12,394  68,652 
Property and equipment, cost 2,861,647  2,480,908  2,203,494  1,926,212  1,758,616  1,699,157 
Accumulated depreciation and amortization (1,568,632) (1,405,836) (1,266,518) (1,109,948) (971,195) (914,034)
Property and equipment, net 1,293,015  1,075,072  936,976  816,264  787,421  785,123 

Based on: 10-K (filing date: 2020-01-21), 10-K (filing date: 2019-01-25), 10-K (filing date: 2018-01-22), 10-K (filing date: 2017-01-20), 10-K (filing date: 2016-01-19), 10-K (filing date: 2015-01-20).

Item Description The company
Property and equipment, cost Amount before accumulated depreciation, depletion and amortization of physical assets used in the normal conduct of business and not intended for resale. Examples include, but are not limited to, land, buildings, machinery and equipment, office equipment, and furniture and fixtures. Adobe Inc.’s property and equipment, cost increased from 2017 to 2018 and from 2018 to 2019.
Property and equipment, net Amount after accumulated depreciation, depletion and amortization of physical assets used in the normal conduct of business to produce goods and services and not intended for resale. Examples include, but are not limited to, land, buildings, machinery and equipment, office equipment, and furniture and fixtures. Adobe Inc.’s property and equipment, net increased from 2017 to 2018 and from 2018 to 2019.

Asset Age Ratios (Summary)

Adobe Inc., asset age ratios

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Nov 29, 2019 Nov 30, 2018 Dec 1, 2017 Dec 2, 2016 Nov 27, 2015 Nov 28, 2014
Average age ratio 57.74% 60.19% 59.58% 60.03% 57.54% 57.38%
Estimated total useful life (years) 16 15 14 12 12 11
Estimated age, time elapsed since purchase (years) 9 9 8 7 7 6
Estimated remaining life (years) 7 6 5 5 5 5

Based on: 10-K (filing date: 2020-01-21), 10-K (filing date: 2019-01-25), 10-K (filing date: 2018-01-22), 10-K (filing date: 2017-01-20), 10-K (filing date: 2016-01-19), 10-K (filing date: 2015-01-20).

Asset age ratio Description The company
Average age ratio 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. Adobe Inc.’s average age ratio of depreciable property, plant and equipment deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 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. Adobe Inc.’s estimated total useful life of depreciable property, plant and equipment increased from 2017 to 2018 and from 2018 to 2019.
Estimated time elapsed since purchase The approximate age in years of a company’s fixed assets. Useful for comparison purposes. Adobe Inc.’s estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2017 to 2018 and from 2018 to 2019.
Estimated remaining life Adobe Inc.’s estimated remaining life of depreciable property, plant and equipment increased from 2017 to 2018 and from 2018 to 2019.

Average Age

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Nov 29, 2019 Nov 30, 2018 Dec 1, 2017 Dec 2, 2016 Nov 27, 2015 Nov 28, 2014
Selected Financial Data (US$ in thousands)
Accumulated depreciation and amortization 1,568,632  1,405,836  1,266,518  1,109,948  971,195  914,034 
Property and equipment, cost 2,861,647  2,480,908  2,203,494  1,926,212  1,758,616  1,699,157 
Land 144,871  145,065  77,723  77,340  70,728  106,283 
Asset Age Ratio
Average age1 57.74% 60.19% 59.58% 60.03% 57.54% 57.38%

Based on: 10-K (filing date: 2020-01-21), 10-K (filing date: 2019-01-25), 10-K (filing date: 2018-01-22), 10-K (filing date: 2017-01-20), 10-K (filing date: 2016-01-19), 10-K (filing date: 2015-01-20).

2019 Calculations

1 Average age = 100 × Accumulated depreciation and amortization ÷ (Property and equipment, cost – Land)
= 100 × 1,568,632 ÷ (2,861,647144,871) = 57.74%

Asset age 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. Adobe Inc.’s average age ratio of depreciable property, plant and equipment deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.

Estimated Total Useful Life

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Nov 29, 2019 Nov 30, 2018 Dec 1, 2017 Dec 2, 2016 Nov 27, 2015 Nov 28, 2014
Selected Financial Data (US$ in thousands)
Property and equipment, cost 2,861,647  2,480,908  2,203,494  1,926,212  1,758,616  1,699,157 
Land 144,871  145,065  77,723  77,340  70,728  106,283 
Depreciation and amortization expense of property and equipment 173,100  157,100  156,900  157,600  146,300  144,200 
Asset Age Ratio (Years)
Estimated total useful life1 16 15 14 12 12 11

Based on: 10-K (filing date: 2020-01-21), 10-K (filing date: 2019-01-25), 10-K (filing date: 2018-01-22), 10-K (filing date: 2017-01-20), 10-K (filing date: 2016-01-19), 10-K (filing date: 2015-01-20).

2019 Calculations

1 Estimated total useful life = (Property and equipment, cost – Land) ÷ Depreciation and amortization expense of property and equipment
= (2,861,647144,871) ÷ 173,100 = 16

Asset age 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. Adobe Inc.’s estimated total useful life of depreciable property, plant and equipment increased from 2017 to 2018 and from 2018 to 2019.

Estimated Age, Time Elapsed since Purchase

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Nov 29, 2019 Nov 30, 2018 Dec 1, 2017 Dec 2, 2016 Nov 27, 2015 Nov 28, 2014
Selected Financial Data (US$ in thousands)
Accumulated depreciation and amortization 1,568,632  1,405,836  1,266,518  1,109,948  971,195  914,034 
Depreciation and amortization expense of property and equipment 173,100  157,100  156,900  157,600  146,300  144,200 
Asset Age Ratio (Years)
Time elapsed since purchase1 9 9 8 7 7 6

Based on: 10-K (filing date: 2020-01-21), 10-K (filing date: 2019-01-25), 10-K (filing date: 2018-01-22), 10-K (filing date: 2017-01-20), 10-K (filing date: 2016-01-19), 10-K (filing date: 2015-01-20).

2019 Calculations

1 Time elapsed since purchase = Accumulated depreciation and amortization ÷ Depreciation and amortization expense of property and equipment
= 1,568,632 ÷ 173,100 = 9

Asset age ratio Description The company
Estimated time elapsed since purchase The approximate age in years of a company’s fixed assets. Useful for comparison purposes. Adobe Inc.’s estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2017 to 2018 and from 2018 to 2019.

Estimated Remaining Life

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Nov 29, 2019 Nov 30, 2018 Dec 1, 2017 Dec 2, 2016 Nov 27, 2015 Nov 28, 2014
Selected Financial Data (US$ in thousands)
Property and equipment, net 1,293,015  1,075,072  936,976  816,264  787,421  785,123 
Land 144,871  145,065  77,723  77,340  70,728  106,283 
Depreciation and amortization expense of property and equipment 173,100  157,100  156,900  157,600  146,300  144,200 
Asset Age Ratio (Years)
Estimated remaining life1 7 6 5 5 5 5

Based on: 10-K (filing date: 2020-01-21), 10-K (filing date: 2019-01-25), 10-K (filing date: 2018-01-22), 10-K (filing date: 2017-01-20), 10-K (filing date: 2016-01-19), 10-K (filing date: 2015-01-20).

2019 Calculations

1 Estimated remaining life = (Property and equipment, net – Land) ÷ Depreciation and amortization expense of property and equipment
= (1,293,015144,871) ÷ 173,100 = 7

Asset age ratio Description The company
Estimated remaining life Adobe Inc.’s estimated remaining life of depreciable property, plant and equipment increased from 2017 to 2018 and from 2018 to 2019.