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Analysis of Property, Plant and Equipment
Difficulty: Advanced
Property, Plant and Equipment Accounting Policy
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets or, when applicable, the life of the lease related to leasehold improvements, whichever is shorter.
Building Construction-in-progress
Building construction-in-progress is associated with the construction of an office building in the Netherlands and is included in "Property and equipment, net" in the Consolidated Balance Sheets at December 31, 2017 and 2016. Depreciation of the building and its related components will commence once it is ready for Booking Holdings’ use.
Website and Internal-use Software Capitalization
Certain direct development costs associated with website and internal-use software are capitalized and include external direct costs of services and payroll costs for employees devoting time to the software projects principally related to website and mobile app development, including support systems, software coding, designing system interfaces and installation and testing of the software. These costs are recorded as property and equipment and are generally amortized over a period of two to five years beginning when the asset is substantially ready for use. Costs incurred for enhancements that are expected to result in additional features or functionalities are capitalized and amortized over the estimated useful life of the enhancements. Costs incurred during the preliminary project stage, as well as maintenance and training costs, are expensed as incurred. Additions to capitalized costs during the years ended December 31, 2017, 2016 and 2015 were $80.4 million, $54.2 million and $44.2 million, respectively.
Source: 10-K (filing date: 2018-02-27).
Property, Plant and Equipment Disclosure
Booking Holdings Inc., Statement of Financial Position, Property, Plant and Equipment
USD $ in thousands
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| Computer equipment and software | |
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| Office equipment, furniture and fixtures | |
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| Building construction-in-progress | |
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| Property and equipment, gross | |
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| Accumulated depreciation | |
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| Property and equipment, net | |
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Based on: 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-17), 10-K (filing date: 2015-02-19), 10-K (filing date: 2014-02-20).
| Item | Description | The company |
|---|---|---|
| Property and equipment, gross | 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. | Booking Holdings Inc.’s property and equipment, gross increased from 2015 to 2016 and from 2016 to 2017. |
| 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. | Booking Holdings Inc.’s property and equipment, net increased from 2015 to 2016 and from 2016 to 2017. |
Property, Plant and Equipment Ratios (Summary)
Booking Holdings Inc., Property, Plant and Equipment Ratios
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
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| Estimated total useful life (years) | |
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| Estimated age, time elapsed since purchase (years) | |
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| Estimated remaining life (years) | |
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Based on: 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-17), 10-K (filing date: 2015-02-19), 10-K (filing date: 2014-02-20).
| 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. | Booking Holdings Inc.’s average age of depreciable property, plant and equipment deteriorated from 2015 to 2016 and from 2016 to 2017. |
| 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. | Booking Holdings Inc.’s estimated total useful life of depreciable property, plant and equipment declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level. |
| Estimated time elapsed since purchase | The approximate age in years of a company’s fixed assets. Useful for comparison purposes. | Booking Holdings Inc.’s estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017. |
| Estimated remaining life | Booking Holdings Inc.’s estimated remaining life of depreciable property, plant and equipment declined from 2015 to 2016 but then slightly increased from 2016 to 2017. |
Average Age
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
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| Selected Financial Data (USD $ in thousands) | ||||||
| Accumulated depreciation | |
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| Property and equipment, gross | |
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| Average age1 | |
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Based on: 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-17), 10-K (filing date: 2015-02-19), 10-K (filing date: 2014-02-20).
2017 Calculations
1 Average age = 100 × Accumulated depreciation ÷ Property and equipment, gross
= 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. | Booking Holdings Inc.’s average age of depreciable property, plant and equipment deteriorated from 2015 to 2016 and from 2016 to 2017. |
Estimated Total Useful Life
Based on: 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-17), 10-K (filing date: 2015-02-19), 10-K (filing date: 2014-02-20).
2017 Calculations
1 Estimated total useful life (years) = Property and equipment, gross ÷ Depreciation expense
= ÷ =
| 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. | Booking Holdings Inc.’s estimated total useful life of depreciable property, plant and equipment declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level. |
Estimated Age, Time Elapsed since Purchase
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
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| Selected Financial Data (USD $ in thousands) | ||||||
| Accumulated depreciation | |
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| Depreciation expense | |
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| Time elapsed since purchase (years)1 | |
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Based on: 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-17), 10-K (filing date: 2015-02-19), 10-K (filing date: 2014-02-20).
2017 Calculations
1 Time elapsed since purchase (years) = Accumulated depreciation ÷ Depreciation expense
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Estimated time elapsed since purchase | The approximate age in years of a company’s fixed assets. Useful for comparison purposes. | Booking Holdings Inc.’s estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017. |
Estimated Remaining Life
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
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| Selected Financial Data (USD $ in thousands) | ||||||
| Property and equipment, net | |
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| Depreciation expense | |
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| Ratio | ||||||
| Estimated remaining life (years)1 | |
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Based on: 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-17), 10-K (filing date: 2015-02-19), 10-K (filing date: 2014-02-20).
2017 Calculations
1 Estimated remaining life (years) = Property and equipment, net ÷ Depreciation expense
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Estimated remaining life | Booking Holdings Inc.’s estimated remaining life of depreciable property, plant and equipment declined from 2015 to 2016 but then slightly increased from 2016 to 2017. |