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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, which includes amounts recorded under capital leases, are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets or the remaining lease term, whichever is shorter.

The estimated useful lives of property and equipment are described below:

Property and Equipment Useful Life
Network equipment Three to 20 years
Buildings Three to 30 years
Computer software, office equipment and other Two to five years
Leased equipment and leasehold improvements Lesser of estimated useful life or remaining lease term

Land and assets held within construction in progress are not depreciated. Construction in progress is related to the construction or development of property and equipment that have not yet been placed in service for their intended use.

The cost of maintenance and repairs is expensed as incurred. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from their respective accounts, and any gain or loss on such sale or disposal is reflected in income from operations.

Source: Facebook Inc., Annual Report


Property, Plant and Equipment Disclosure

Facebook Inc., Statement of Financial Position, Property, Plant and Equipment

USD $ in millions

Microsoft Excel LibreOffice Calc

Source: Based on data from Facebook Inc. Annual Reports

Item Description The company
Land Carrying amount as of the balance sheet date of real estate held for productive use. This excludes land held for sale. Facebook Inc.'s land increased from 2015 to 2016 and from 2016 to 2017.
Buildings Carrying amount as of the balance sheet date of long-lived, depreciable assets that include building structures held for productive use including any addition, improvement, or renovation to the structure, such as interior masonry, interior flooring, electrical, and plumbing. Facebook Inc.'s buildings increased from 2015 to 2016 and from 2016 to 2017.
Leasehold improvements Carrying amount at the balance sheet date of long-lived, depreciable asset that is an addition or improvement to assets held under lease arrangement. Facebook Inc.'s leasehold improvements 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. Facebook Inc.'s construction in progress increased from 2015 to 2016 and from 2016 to 2017.
Property and equipment, gross 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. Facebook Inc.'s property and equipment, gross 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. Facebook Inc.'s property and equipment, net increased from 2015 to 2016 and from 2016 to 2017.

Property, Plant and Equipment Ratios (Summary)

Facebook Inc., Property, Plant and Equipment Ratios

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Average age hidden% hidden% hidden% hidden% hidden%
Estimated total useful life (years) hidden hidden hidden hidden hidden
Estimated age, time elapsed since purchase (years) hidden hidden hidden hidden hidden
Estimated remaining life (years) 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. Facebook Inc.'s average age of depreciable property, plant and equipment improved 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. Facebook 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. Facebook Inc.'s estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017.
Estimated remaining life Facebook Inc.'s estimated remaining life of depreciable property, plant and equipment increased from 2015 to 2016 and from 2016 to 2017.

Average Age

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Accumulated depreciation hidden hidden hidden hidden hidden
Property and equipment, gross hidden hidden hidden hidden hidden
Land hidden hidden hidden hidden hidden
Ratio
Average age1 hidden% hidden% hidden% hidden% hidden%

2017 Calculations

1 Average age = 100 × Accumulated depreciation ÷ (Property and equipment, gross – Land)
= 100 × hidden ÷ (hiddenhidden) = 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. Facebook Inc.'s average age of depreciable property, plant and equipment improved from 2015 to 2016 and from 2016 to 2017.

Estimated Total Useful Life

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Property and equipment, gross hidden hidden hidden hidden hidden
Land hidden hidden hidden hidden hidden
Depreciation expense on property and equipment hidden hidden hidden hidden hidden
Ratio
Estimated total useful life (years)1 hidden hidden hidden hidden hidden

2017 Calculations

1 Estimated total useful life (years) = (Property and equipment, gross – Land) ÷ Depreciation expense on property and equipment
= (hiddenhidden) ÷ 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. Facebook Inc.'s estimated total useful life of depreciable property, plant and equipment increased from 2015 to 2016 and from 2016 to 2017.

Estimated Age, Time Elapsed Since Purchase

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

2017 Calculations

1 Time elapsed since purchase (years) = Accumulated depreciation ÷ Depreciation expense on 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. Facebook Inc.'s estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017.

Estimated Remaining Life

Microsoft Excel LibreOffice Calc
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 hidden hidden hidden hidden hidden
Land hidden hidden hidden hidden hidden
Depreciation expense on property and equipment hidden hidden hidden hidden hidden
Ratio
Estimated remaining life (years)1 hidden hidden hidden hidden hidden

2017 Calculations

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

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