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Microsoft Excel LibreOffice Calc

Automatic Data Processing Inc. (ADP)


Analysis of Property, Plant and Equipment

Advanced level


Accounting Policy on Property, Plant and Equipment

Property, plant and equipment is stated at cost less accumulated depreciation on the Consolidated Balance Sheets. Depreciation is recognized over the estimated useful lives of the assets using the straight-line method. Leasehold improvements are amortized over the shorter of the term of the lease or the estimated useful lives of the improvements. The estimated useful lives of assets are primarily as follows:

Data processing equipment 3 to 10 years
Buildings 20 to 40 years
Furniture and fixtures 4 to 7 years

ADP has obligations under various facilities and equipment leases. ADP assesses whether these arrangements meet the criteria for capital leases by determining whether the agreement transfers ownership of the asset, whether the lease includes a bargain purchase option, whether the lease term is for greater than 75% of the asset’s useful life, or whether the minimum lease payments exceed 90% of the leased equipment’s fair market value. All of ADP’s leases are classified as operating leases. Total expense under these operating lease agreements was approximately $270.1 million, $234.9 million, and $234.5 million in fiscal 2019, 2018, and 2017, respectively.

Source: 10-K (filing date: 2019-08-09).


Property, Plant and Equipment Disclosure

Automatic Data Processing Inc., balance sheet: property, plant and equipment

US$ in thousands

Microsoft Excel LibreOffice Calc
Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014
Land and buildings hidden hidden hidden hidden hidden hidden
Data processing equipment hidden hidden hidden hidden hidden hidden
Furniture, leaseholds, and other hidden hidden hidden hidden hidden hidden
Property, plant and equipment at cost hidden hidden hidden hidden hidden hidden
Accumulated depreciation hidden hidden hidden hidden hidden hidden
Property, plant and equipment, net hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-08-09), 10-K (filing date: 2018-08-03), 10-K (filing date: 2017-08-04), 10-K (filing date: 2016-08-05), 10-K (filing date: 2015-08-07), 10-K (filing date: 2014-08-08).

Item Description The company
Property, plant and equipment at 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. Automatic Data Processing Inc.’s property, plant and equipment at cost increased from 2017 to 2018 and from 2018 to 2019.
Property, plant 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. Automatic Data Processing Inc.’s property, plant and equipment, net increased from 2017 to 2018 but then decreased significantly from 2018 to 2019.

Asset Age Ratios (Summary)

Automatic Data Processing Inc., asset age ratios

Microsoft Excel LibreOffice Calc
Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014
Average age ratio hidden hidden hidden hidden hidden hidden
Estimated total useful life (years) hidden hidden hidden hidden hidden hidden
Estimated age, time elapsed since purchase (years) hidden hidden hidden hidden hidden hidden
Estimated remaining life (years) hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-08-09), 10-K (filing date: 2018-08-03), 10-K (filing date: 2017-08-04), 10-K (filing date: 2016-08-05), 10-K (filing date: 2015-08-07), 10-K (filing date: 2014-08-08).

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. Automatic Data Processing Inc.’s average age ratio of depreciable property, plant and equipment deteriorated from 2017 to 2018 and from 2018 to 2019.
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. Automatic Data Processing Inc.’s estimated total useful life of depreciable property, plant and equipment decreased 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. Automatic Data Processing Inc.’s estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019.
Estimated remaining life Automatic Data Processing Inc.’s estimated remaining life of depreciable property, plant and equipment decreased from 2017 to 2018 and from 2018 to 2019.

Average Age

Microsoft Excel LibreOffice Calc
Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014
Selected Financial Data (US$ in thousands)
Accumulated depreciation hidden hidden hidden hidden hidden hidden
Property, plant and equipment at cost hidden hidden hidden hidden hidden hidden
Asset Age Ratio
Average age1 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-08-09), 10-K (filing date: 2018-08-03), 10-K (filing date: 2017-08-04), 10-K (filing date: 2016-08-05), 10-K (filing date: 2015-08-07), 10-K (filing date: 2014-08-08).

2019 Calculations

1 Average age = 100 × Accumulated depreciation ÷ Property, plant and equipment at cost
= 100 × hidden ÷ hidden = hidden

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. Automatic Data Processing Inc.’s average age ratio of depreciable property, plant and equipment deteriorated from 2017 to 2018 and from 2018 to 2019.

Estimated Total Useful Life

Microsoft Excel LibreOffice Calc
Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014
Selected Financial Data (US$ in thousands)
Property, plant and equipment at cost hidden hidden hidden hidden hidden hidden
Depreciation of property, plant and equipment hidden hidden hidden hidden hidden hidden
Asset Age Ratio (Years)
Estimated total useful life1 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-08-09), 10-K (filing date: 2018-08-03), 10-K (filing date: 2017-08-04), 10-K (filing date: 2016-08-05), 10-K (filing date: 2015-08-07), 10-K (filing date: 2014-08-08).

2019 Calculations

1 Estimated total useful life = Property, plant and equipment at cost ÷ Depreciation of property, plant and equipment
= hidden ÷ hidden = hidden

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. Automatic Data Processing Inc.’s estimated total useful life of depreciable property, plant and equipment decreased from 2017 to 2018 and from 2018 to 2019.

Estimated Age, Time Elapsed since Purchase

Microsoft Excel LibreOffice Calc
Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014
Selected Financial Data (US$ in thousands)
Accumulated depreciation hidden hidden hidden hidden hidden hidden
Depreciation of property, plant and equipment hidden hidden hidden hidden hidden hidden
Asset Age Ratio (Years)
Time elapsed since purchase1 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-08-09), 10-K (filing date: 2018-08-03), 10-K (filing date: 2017-08-04), 10-K (filing date: 2016-08-05), 10-K (filing date: 2015-08-07), 10-K (filing date: 2014-08-08).

2019 Calculations

1 Time elapsed since purchase = Accumulated depreciation ÷ Depreciation of property, plant and equipment
= hidden ÷ hidden = hidden

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. Automatic Data Processing Inc.’s estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019.

Estimated Remaining Life

Microsoft Excel LibreOffice Calc
Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014
Selected Financial Data (US$ in thousands)
Property, plant and equipment, net hidden hidden hidden hidden hidden hidden
Depreciation of property, plant and equipment hidden hidden hidden hidden hidden hidden
Asset Age Ratio (Years)
Estimated remaining life1 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-08-09), 10-K (filing date: 2018-08-03), 10-K (filing date: 2017-08-04), 10-K (filing date: 2016-08-05), 10-K (filing date: 2015-08-07), 10-K (filing date: 2014-08-08).

2019 Calculations

1 Estimated remaining life = Property, plant and equipment, net ÷ Depreciation of property, plant and equipment
= hidden ÷ hidden = hidden

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