.Analysis of Property, Plant and Equipment
Difficulty: Advanced
Property, Plant and Equipment Accounting Policy
Property and equipment is stated at cost, net of accumulated depreciation. Depreciation of property and equipment is computed on a straight-line basis over the following estimated useful lives:
| Computers, related equipment and software | 2 to 7 years |
| Furniture and fixtures | 5 to 10 years |
| Leasehold improvements | Lesser of lease term or 15 years |
Source: Accenture PLC, Annual Report
Property, Plant and Equipment Disclosure
Accenture PLC, Statement of Financial Position, Property, Plant and Equipment
USD $ in thousands
| Aug 31, 2017 | Aug 31, 2016 | Aug 31, 2015 | Aug 31, 2014 | Aug 31, 2013 | Aug 31, 2012 | ||
|---|---|---|---|---|---|---|---|
| | Buildings and land | ||||||
| | Computers, related equipment and software | ||||||
| | Furniture and fixtures | ||||||
| | Leasehold improvements | ||||||
| | Property and equipment, gross | ||||||
| | Accumulated depreciation | ||||||
| | Property and equipment, net |
Source: Based on data from Accenture PLC Annual Reports
| Item | Description | The company |
|---|---|---|
| Computers, related equipment and software | Carrying amount as of the balance sheet date of long-lived, depreciable asset used in production process to produce goods and services. | Accenture PLC's computers, related equipment and software increased from 2015 to 2016 and from 2016 to 2017. |
| 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. | Accenture PLC's furniture and fixtures 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. | Accenture PLC's leasehold improvements 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. | Accenture PLC'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. | Accenture PLC's property and equipment, net increased from 2015 to 2016 and from 2016 to 2017. |
Property, Plant and Equipment Ratios (Summary)
Accenture PLC, Property, Plant and Equipment Ratios
| Aug 31, 2017 | Aug 31, 2016 | Aug 31, 2015 | Aug 31, 2014 | Aug 31, 2013 | Aug 31, 2012 | ||
|---|---|---|---|---|---|---|---|
| | Average age | % | % | % | % | % | % |
| | Estimated total useful life (years) | ||||||
| | Estimated age, time elapsed since purchase (years) | ||||||
| | Estimated remaining life (years) |
| 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. | Accenture PLC'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. | Accenture PLC'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. | Accenture PLC's estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2015 to 2016 and from 2016 to 2017. |
| Estimated remaining life | Accenture PLC's estimated remaining life of depreciable property, plant and equipment increased from 2015 to 2016 and from 2016 to 2017. |
Average Age
| Aug 31, 2017 | Aug 31, 2016 | Aug 31, 2015 | Aug 31, 2014 | Aug 31, 2013 | Aug 31, 2012 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (USD $ in thousands) | |||||||
| | Accumulated depreciation | ||||||
| | Property and equipment, gross | ||||||
| Ratio | |||||||
| | Average age1 | % | % | % | % | % | % |
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. | Accenture PLC's average age of depreciable property, plant and equipment improved from 2015 to 2016 and from 2016 to 2017. |
Estimated Total Useful Life
| Aug 31, 2017 | Aug 31, 2016 | Aug 31, 2015 | Aug 31, 2014 | Aug 31, 2013 | Aug 31, 2012 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (USD $ in thousands) | |||||||
| | Property and equipment, gross | ||||||
| | Depreciation expense | ||||||
| Ratio | |||||||
| | Estimated total useful life (years)1 | ||||||
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. | Accenture PLC'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
| Aug 31, 2017 | Aug 31, 2016 | Aug 31, 2015 | Aug 31, 2014 | Aug 31, 2013 | Aug 31, 2012 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (USD $ in thousands) | |||||||
| | Accumulated depreciation | ||||||
| | Depreciation expense | ||||||
| Ratio | |||||||
| | Time elapsed since purchase (years)1 | ||||||
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. | Accenture PLC's estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2015 to 2016 and from 2016 to 2017. |
Estimated Remaining Life
| Aug 31, 2017 | Aug 31, 2016 | Aug 31, 2015 | Aug 31, 2014 | Aug 31, 2013 | Aug 31, 2012 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (USD $ in thousands) | |||||||
| | Property and equipment, net | ||||||
| | Depreciation expense | ||||||
| Ratio | |||||||
| | Estimated remaining life (years)1 | ||||||
2017 Calculations
1 Estimated remaining life (years) = Property and equipment, net ÷ Depreciation expense
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Estimated remaining life | Accenture PLC's estimated remaining life of depreciable property, plant and equipment increased from 2015 to 2016 and from 2016 to 2017. |
