Caterpillar Inc. (CAT)

Depreciation of plant and equipment is computed principally using accelerated methods. Depreciation on equipment leased to others, primarily for Financial Products, is computed using the straight-line method over the term of the lease. The depreciable basis is the original cost of the equipment less the estimated residual value of the equipment at the end of the lease term. In 2017, 2016 and 2015, Cat Financial depreciation on equipment leased to others was $810 million, $841 million and $836 million, respectively, and was included in Other operating (income) expenses. In 2017, 2016 and 2015, consolidated depreciation expense was $2,555 million, $2,707 million and $2,705 million, respectively.

Source: Caterpillar Inc., Annual Report

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

USD $ in millions

Source: Based on data from Caterpillar 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.	Caterpillar Inc.'s land increased from 2015 to 2016 but then slightly declined from 2016 to 2017.
Buildings and land improvements	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.	Caterpillar Inc.'s buildings and land improvements increased from 2015 to 2016 and from 2016 to 2017.
Machinery, equipment and other	Carrying amount as of the balance sheet date of long-lived, depreciable asset used in production process to produce goods and services.	Caterpillar Inc.'s machinery, equipment and other declined from 2015 to 2016 and from 2016 to 2017.
Equipment leased to others	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.	Caterpillar Inc.'s equipment leased to others increased from 2015 to 2016 but then slightly declined from 2016 to 2017.
Construction-in-process	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.	Caterpillar Inc.'s construction-in-process declined from 2015 to 2016 and from 2016 to 2017.
Property, plant and equipment, at cost	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.	Caterpillar Inc.'s property, plant and equipment, at cost declined from 2015 to 2016 and from 2016 to 2017.
Property, plant 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.	Caterpillar Inc.'s property, plant and equipment, net declined from 2015 to 2016 and from 2016 to 2017.

Caterpillar Inc., Property, Plant and Equipment Ratios

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.	Caterpillar Inc.'s average age of depreciable property, plant and equipment deteriorated 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.	Caterpillar Inc.'s estimated total useful life of depreciable property, plant and equipment declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.
Estimated time elapsed since purchase	The approximate age in years of a company's fixed assets. Useful for comparison purposes.	Caterpillar Inc.'s estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2015 to 2016 and from 2016 to 2017.
Estimated remaining life		Caterpillar Inc.'s estimated remaining life of depreciable property, plant and equipment declined from 2015 to 2016 and from 2016 to 2017.

2017 Calculations

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.	Caterpillar Inc.'s average age of depreciable property, plant and equipment deteriorated from 2015 to 2016 and from 2016 to 2017.

2017 Calculations

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.	Caterpillar Inc.'s estimated total useful life of depreciable property, plant and equipment declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.

2017 Calculations

Ratio	Description	The company
Estimated time elapsed since purchase	The approximate age in years of a company's fixed assets. Useful for comparison purposes.	Caterpillar Inc.'s estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2015 to 2016 and from 2016 to 2017.

2017 Calculations

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