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Analysis of Property, Plant and Equipment
Advanced level
Accounting Policy on Property, Plant and Equipment
Property, plant and equipment are recorded at cost and depreciated or amortized using the straight-line method over their estimated useful lives. Upon the retirement or disposition of property, plant and equipment, the related cost and accumulated depreciation or amortization are removed, and a gain or loss is recorded, when appropriate. Buildings on owned land are depreciated over 30 years, and building improvements are depreciated over 15 years. Leasehold improvements and buildings on leased land are amortized over the shorter of their estimated useful lives, not to exceed 15 years and 30 years, respectively, or the remaining term of the related lease. Other property, plant and equipment have useful lives ranging from 2 to 25 years. Leased property meeting certain capital lease criteria is capitalized, and the net present value of the related lease payments is recorded as a liability. Amortization of assets under capital leases is recorded using the straight-line method over the shorter of the estimated useful lives or the lease terms. Maintenance, repairs and minor renewals or betterments are charged to expense as incurred.
Source: 10-K (filing date: 2019-11-06).
Property, Plant and Equipment Disclosure
Qualcomm Inc., balance sheet: property, plant and equipment
US$ in millions
Based on: 10-K (filing date: 2019-11-06), 10-K (filing date: 2018-11-07), 10-K (filing date: 2017-11-01), 10-K (filing date: 2016-11-02), 10-K (filing date: 2015-11-04), 10-K (filing date: 2014-11-05).
| 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. | Qualcomm Inc.’s property, plant and equipment, gross 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. | Qualcomm Inc.’s property, plant and equipment, net decreased from 2017 to 2018 but then slightly increased from 2018 to 2019. |
Asset Age Ratios (Summary)
Qualcomm Inc., asset age ratios
Based on: 10-K (filing date: 2019-11-06), 10-K (filing date: 2018-11-07), 10-K (filing date: 2017-11-01), 10-K (filing date: 2016-11-02), 10-K (filing date: 2015-11-04), 10-K (filing date: 2014-11-05).
| 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. | Qualcomm Inc.’s average age ratio of depreciable property, plant and equipment deteriorated from 2017 to 2018 but then slightly improved 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. | Qualcomm Inc.’s estimated total useful life of depreciable property, plant and equipment decreased from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level. |
| Estimated time elapsed since purchase | The approximate age in years of a company’s fixed assets. Useful for comparison purposes. | Qualcomm Inc.’s estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019. |
| Estimated remaining life | Qualcomm Inc.’s estimated remaining life of depreciable property, plant and equipment decreased from 2017 to 2018 but then increased from 2018 to 2019 not reaching 2017 level. |
Average Age
Based on: 10-K (filing date: 2019-11-06), 10-K (filing date: 2018-11-07), 10-K (filing date: 2017-11-01), 10-K (filing date: 2016-11-02), 10-K (filing date: 2015-11-04), 10-K (filing date: 2014-11-05).
2019 Calculations
1 Average age = 100 × Accumulated depreciation and amortization ÷ (Property, plant and equipment, gross – Land)
= 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. | Qualcomm Inc.’s average age ratio of depreciable property, plant and equipment deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019. |
Estimated Total Useful Life
Based on: 10-K (filing date: 2019-11-06), 10-K (filing date: 2018-11-07), 10-K (filing date: 2017-11-01), 10-K (filing date: 2016-11-02), 10-K (filing date: 2015-11-04), 10-K (filing date: 2014-11-05).
2019 Calculations
1 Estimated total useful life = (Property, plant and equipment, gross – Land) ÷ Depreciation and amortization expense related to property, plant and equipment
= ( – ) ÷ =
| 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. | Qualcomm Inc.’s estimated total useful life of depreciable property, plant and equipment decreased from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level. |
Estimated Age, Time Elapsed since Purchase
Based on: 10-K (filing date: 2019-11-06), 10-K (filing date: 2018-11-07), 10-K (filing date: 2017-11-01), 10-K (filing date: 2016-11-02), 10-K (filing date: 2015-11-04), 10-K (filing date: 2014-11-05).
2019 Calculations
1 Time elapsed since purchase = Accumulated depreciation and amortization ÷ Depreciation and amortization expense related to property, plant and equipment
= ÷ =
| 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. | Qualcomm Inc.’s estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019. |
Estimated Remaining Life
Based on: 10-K (filing date: 2019-11-06), 10-K (filing date: 2018-11-07), 10-K (filing date: 2017-11-01), 10-K (filing date: 2016-11-02), 10-K (filing date: 2015-11-04), 10-K (filing date: 2014-11-05).
2019 Calculations
1 Estimated remaining life = (Property, plant and equipment, net – Land) ÷ Depreciation and amortization expense related to property, plant and equipment
= ( – ) ÷ =
| Asset age ratio | Description | The company |
|---|---|---|
| Estimated remaining life | Qualcomm Inc.’s estimated remaining life of depreciable property, plant and equipment decreased from 2017 to 2018 but then increased from 2018 to 2019 not reaching 2017 level. |