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Microsoft Excel LibreOffice Calc


Analysis of Property, Plant and Equipment

Difficulty: Advanced


Property, Plant and Equipment Accounting Policy

Property and equipment are stated at cost, less accumulated depreciation or amortization, whenever applicable. Depreciation and amortization expenses for property and equipment were approximately $1.1 billion, $1.0 billion, and $1.1 billion for fiscal 2017, 2016, and 2015, respectively. Depreciation and amortization are computed using the straight-line method, generally over the following periods:

Asset Category Period
Buildings 25 years
Building improvements 10 years
Leasehold improvements Shorter of remaining lease term or up to 10 years
Computer equipment and related software 30 to 36 months
Production, engineering, and other equipment Up to 5 years
Operating lease assets Based on lease term
Furniture and fixtures 5 years

Source: Cisco Systems Inc., Annual Report


Property, Plant and Equipment Disclosure

Cisco Systems Inc., Statement of Financial Position, Property, Plant and Equipment

USD $ in millions

Microsoft Excel LibreOffice Calc
Jul 29, 2017 Jul 30, 2016 Jul 25, 2015 Jul 26, 2014 Jul 27, 2013 Jul 28, 2012
Land, buildings, and building and leasehold improvements hidden hidden hidden hidden hidden hidden
Computer equipment and related software hidden hidden hidden hidden hidden hidden
Production, engineering, and other equipment hidden hidden hidden hidden hidden hidden
Operating lease assets hidden hidden hidden hidden hidden hidden
Furniture and fixtures hidden hidden hidden hidden hidden hidden
Gross property and equipment hidden hidden hidden hidden hidden hidden
Accumulated depreciation and amortization hidden hidden hidden hidden hidden hidden
Property and equipment, net hidden hidden hidden hidden hidden hidden

Source: Based on data from Cisco Systems Inc. Annual Reports

Item Description The company
Operating lease assets The amount of lessor property subject to or available for lease, at cost adjusted for any previously recognized impairment charges, by major property class, as of the balance sheet date. Cisco Systems Inc.'s operating lease assets declined from 2015 to 2016 but then increased from 2016 to 2017 not reaching 2015 level.
Furniture and fixtures Carrying amount at the balance sheet date for long-lived, depreciable asset commonly used in offices and stores. Examples include desks, chairs, and store fixtures. Cisco Systems Inc.'s furniture and fixtures 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. Cisco Systems 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. Cisco Systems Inc.'s property and equipment, net increased from 2015 to 2016 but then declined significantly from 2016 to 2017.

Property, Plant and Equipment Ratios (Summary)

Cisco Systems Inc., Property, Plant and Equipment Ratios

Microsoft Excel LibreOffice Calc
Jul 29, 2017 Jul 30, 2016 Jul 25, 2015 Jul 26, 2014 Jul 27, 2013 Jul 28, 2012
Average age 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
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. Cisco Systems Inc.'s average age of depreciable property, plant and equipment improved from 2015 to 2016 but then deteriorated significantly 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. Cisco Systems Inc.'s estimated total useful life of depreciable property, plant and equipment increased from 2015 to 2016 but then slightly declined from 2016 to 2017 not reaching 2015 level.
Estimated time elapsed since purchase The approximate age in years of a company's fixed assets. Useful for comparison purposes. Cisco Systems Inc.'s estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2015 to 2016 but then improved from 2016 to 2017 not reaching 2015 level.
Estimated remaining life Cisco Systems Inc.'s estimated remaining life of depreciable property, plant and equipment increased from 2015 to 2016 but then declined significantly from 2016 to 2017.

Average Age

Microsoft Excel LibreOffice Calc
Jul 29, 2017 Jul 30, 2016 Jul 25, 2015 Jul 26, 2014 Jul 27, 2013 Jul 28, 2012
Selected Financial Data (USD $ in millions)
Accumulated depreciation and amortization hidden hidden hidden hidden hidden hidden
Gross property and equipment hidden hidden hidden hidden hidden hidden
Ratio
Average age1 hidden% hidden% hidden% hidden% hidden% hidden%

2017 Calculations

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

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. Cisco Systems Inc.'s average age of depreciable property, plant and equipment improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017.

Estimated Total Useful Life

Microsoft Excel LibreOffice Calc
Jul 29, 2017 Jul 30, 2016 Jul 25, 2015 Jul 26, 2014 Jul 27, 2013 Jul 28, 2012
Selected Financial Data (USD $ in millions)
Gross property and equipment hidden hidden hidden hidden hidden hidden
Depreciation and amortization expenses for property and equipment hidden hidden hidden hidden hidden hidden
Ratio
Estimated total useful life (years)1 hidden hidden hidden hidden hidden hidden

2017 Calculations

1 Estimated total useful life (years) = Gross property and equipment ÷ Depreciation and amortization expenses for property and equipment
= hidden ÷ hidden = hidden

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. Cisco Systems Inc.'s estimated total useful life of depreciable property, plant and equipment increased from 2015 to 2016 but then slightly declined from 2016 to 2017 not reaching 2015 level.

Estimated Age, Time Elapsed Since Purchase

Microsoft Excel LibreOffice Calc
Jul 29, 2017 Jul 30, 2016 Jul 25, 2015 Jul 26, 2014 Jul 27, 2013 Jul 28, 2012
Selected Financial Data (USD $ in millions)
Accumulated depreciation and amortization hidden hidden hidden hidden hidden hidden
Depreciation and amortization expenses for property and equipment hidden hidden hidden hidden hidden hidden
Ratio
Time elapsed since purchase (years)1 hidden hidden hidden hidden hidden hidden

2017 Calculations

1 Time elapsed since purchase (years) = Accumulated depreciation and amortization ÷ Depreciation and amortization expenses for property and equipment
= hidden ÷ hidden = hidden

Ratio Description The company
Estimated time elapsed since purchase The approximate age in years of a company's fixed assets. Useful for comparison purposes. Cisco Systems Inc.'s estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2015 to 2016 but then improved from 2016 to 2017 not reaching 2015 level.

Estimated Remaining Life

Microsoft Excel LibreOffice Calc
Jul 29, 2017 Jul 30, 2016 Jul 25, 2015 Jul 26, 2014 Jul 27, 2013 Jul 28, 2012
Selected Financial Data (USD $ in millions)
Property and equipment, net hidden hidden hidden hidden hidden hidden
Depreciation and amortization expenses for property and equipment hidden hidden hidden hidden hidden hidden
Ratio
Estimated remaining life (years)1 hidden hidden hidden hidden hidden hidden

2017 Calculations

1 Estimated remaining life (years) = Property and equipment, net ÷ Depreciation and amortization expenses for property and equipment
= hidden ÷ hidden = hidden

Ratio Description The company
Estimated remaining life Cisco Systems Inc.'s estimated remaining life of depreciable property, plant and equipment increased from 2015 to 2016 but then declined significantly from 2016 to 2017.