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Gilead Sciences Inc. (GILD)
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 and amortization. Depreciation and amortization are recognized using the straight-line method. Repairs and maintenance costs are expensed as incurred. Estimated useful lives in years are generally as follows:
| Description | Estimated Useful Life |
| Buildings and improvements | Shorter of 35 years or useful life |
| Laboratory and manufacturing equipment | 4-10 |
| Office and computer equipment | 3-7 |
| Leasehold improvements | Shorter of useful life or lease term |
Source: 10-K (filing date: 2019-02-26).
Property, Plant and Equipment Disclosure
Gilead Sciences Inc., balance sheet: property, plant and equipment
US$ in millions
Based on: 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-24), 10-K (filing date: 2015-02-25).
| Item | Description | The company |
|---|---|---|
| Property, plant 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. | Gilead Sciences Inc.’s property, plant and equipment, gross increased from 2016 to 2017 and from 2017 to 2018. |
| 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. | Gilead Sciences Inc.’s property, plant and equipment, net increased from 2016 to 2017 and from 2017 to 2018. |
Asset Age Ratios (Summary)
Gilead Sciences Inc., asset age ratios
Based on: 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-24), 10-K (filing date: 2015-02-25).
| 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. | Gilead Sciences Inc.’s average age ratio of depreciable property, plant and equipment deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 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. | Gilead Sciences Inc.’s estimated total useful life of depreciable property, plant and equipment decreased from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level. |
| Estimated time elapsed since purchase | The approximate age in years of a company’s fixed assets. Useful for comparison purposes. | Gilead Sciences Inc.’s estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2016 to 2017 but then deteriorated significantly from 2017 to 2018. |
| Estimated remaining life | Gilead Sciences Inc.’s estimated remaining life of depreciable property, plant and equipment decreased from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level. |
Average Age
Based on: 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-24), 10-K (filing date: 2015-02-25).
2018 Calculations
1 Average age = 100 × Accumulated depreciation and amortization ÷ (Property, plant and equipment, gross – Land and land improvements)
= 100 × ÷ ( – ) =
| 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. | Gilead Sciences Inc.’s average age ratio of depreciable property, plant and equipment deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level. |
Estimated Total Useful Life
Based on: 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-24), 10-K (filing date: 2015-02-25).
2018 Calculations
1 Estimated total useful life = (Property, plant and equipment, gross – Land and land improvements) ÷ Depreciation expense
= ( – ) ÷ =
| 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. | Gilead Sciences Inc.’s estimated total useful life of depreciable property, plant and equipment decreased from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level. |
Estimated Age, Time Elapsed since Purchase
Based on: 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-24), 10-K (filing date: 2015-02-25).
2018 Calculations
1 Time elapsed since purchase = Accumulated depreciation and amortization ÷ Depreciation expense
= ÷ =
| 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. | Gilead Sciences Inc.’s estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2016 to 2017 but then deteriorated significantly from 2017 to 2018. |
Estimated Remaining Life
Based on: 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-24), 10-K (filing date: 2015-02-25).
2018 Calculations
1 Estimated remaining life = (Property, plant and equipment, net – Land and land improvements) ÷ Depreciation expense
= ( – ) ÷ =
| Asset age ratio | Description | The company |
|---|---|---|
| Estimated remaining life | Gilead Sciences Inc.’s estimated remaining life of depreciable property, plant and equipment decreased from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level. |