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Property, Plant and Equipment Accounting Policy

Internal-Use Software and Website Development

Costs incurred to develop software for internal use and Amazon.com's websites are capitalized and amortized over the estimated useful life of the software. Costs related to design or maintenance of internal-use software and website development are expensed as incurred. For the years ended 2015, 2016, and 2017, Amazon.com capitalized $642 million (including $114 million of stock-based compensation), $511 million (including $94 million of stock-based compensation), and $395 million (including $84 million of stock-based compensation) of costs associated with internal-use software and website development. Amortization of previously capitalized amounts was $635 million, $634 million, and $545 million for 2015, 2016, and 2017.

Property and Equipment, Net

Property and equipment are stated at cost less accumulated depreciation. Incentives that Amazon.com receives from property and equipment vendors are recorded as a reduction in the costs. Property includes buildings and land that Amazon.com owns, along with property Amazon.com has acquired under build-to-suit, finance, and capital lease arrangements. Equipment includes assets such as furniture and fixtures, heavy equipment, servers and networking equipment, and internal-use software and website development. Depreciation is recorded on a straight-line basis over the estimated useful lives of the assets (generally the lesser of 40 years or the remaining life of the underlying building, two years for assets such as internal-use software, three years for Amazon.com's servers, five years for networking equipment, five yearsfor furniture and fixtures, and ten years for heavy equipment). Depreciation expense is classified within the corresponding operating expense categories on Amazon.com's consolidated statements of operations.

Source: Amazon.com Inc., Annual Report

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Property, Plant and Equipment Disclosure

Amazon.com Inc., Statement of Financial Position, Property, Plant and Equipment

USD $ in millions

 

Source: Based on data from Amazon.com Inc. Annual Reports

Item Description The company
Equipment and internal-use software Carrying amount as of the balance sheet date of long-lived, depreciable asset used in production process to produce goods and services. Amazon.com Inc.'s equipment and internal-use software increased from 2015 to 2016 and from 2016 to 2017.
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. Amazon.com Inc.'s construction in progress increased from 2015 to 2016 and from 2016 to 2017.
Gross property and equipment 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. Amazon.com Inc.'s gross property and equipment increased from 2015 to 2016 and from 2016 to 2017.
Property and equipment, net 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. Amazon.com Inc.'s property and equipment, net increased from 2015 to 2016 and from 2016 to 2017.

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Property, Plant and Equipment Ratios (Summary)

Amazon.com Inc., Property, Plant and Equipment Ratios

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Average age % % % % %
Estimated total useful life (years)
Estimated age, time elapsed since purchase (years)
Estimated remaining life (years)
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. Amazon.com Inc.'s average age of depreciable property, plant and equipment deteriorated from 2015 to 2016 but then improved from 2016 to 2017 not reaching 2015 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. Amazon.com Inc.'s estimated total useful life of depreciable property, plant and equipment increased from 2015 to 2016 and from 2016 to 2017.
Estimated time elapsed since purchase The approximate age in years of a company's fixed assets. Useful for comparison purposes. Amazon.com Inc.'s estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2015 to 2016 and from 2016 to 2017.
Estimated remaining life Amazon.com Inc.'s estimated remaining life of depreciable property, plant and equipment increased from 2015 to 2016 and from 2016 to 2017.

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Average Age

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Accumulated depreciation
Gross property and equipment
Ratio
Average age1 % % % % %

2017 Calculations

1 Average age = 100 × Accumulated depreciation ÷ Gross property and equipment
= 100 × ÷ = %

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. Amazon.com Inc.'s average age of depreciable property, plant and equipment deteriorated from 2015 to 2016 but then improved from 2016 to 2017 not reaching 2015 level.

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Estimated Total Useful Life

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Gross property and equipment
Depreciation expense on property and equipment
Ratio
Estimated total useful life (years)1

2017 Calculations

1 Estimated total useful life (years) = Gross property and equipment ÷ Depreciation expense on property and equipment
= ÷ =

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. Amazon.com Inc.'s estimated total useful life of depreciable property, plant and equipment increased from 2015 to 2016 and from 2016 to 2017.

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Estimated Age, Time Elapsed Since Purchase

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Accumulated depreciation
Depreciation expense on property and equipment
Ratio
Time elapsed since purchase (years)1

2017 Calculations

1 Time elapsed since purchase (years) = Accumulated depreciation ÷ Depreciation expense on property and equipment
= ÷ =

Ratio Description The company
Estimated time elapsed since purchase The approximate age in years of a company's fixed assets. Useful for comparison purposes. Amazon.com Inc.'s estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2015 to 2016 and from 2016 to 2017.

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Estimated Remaining Life

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Property and equipment, net
Depreciation expense on property and equipment
Ratio
Estimated remaining life (years)1

2017 Calculations

1 Estimated remaining life (years) = Property and equipment, net ÷ Depreciation expense on property and equipment
= ÷ =

Ratio Description The company
Estimated remaining life Amazon.com Inc.'s estimated remaining life of depreciable property, plant and equipment increased from 2015 to 2016 and from 2016 to 2017.

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