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General Electric Co. (GE)
Analysis of Property, Plant and Equipment
Difficulty: Advanced
Property, Plant and Equipment Accounting Policy
The cost of GE property, plant and equipment is generally depreciated on a straight-line basis over its estimated economic life. The cost of GE Capital equipment leased to others on operating leases is depreciated on a straight-line basis to estimated residual value over the lease term or over the estimated economic life of the equipment.
Source: 10-K (filing date: 2019-02-26).
Property, Plant and Equipment Disclosure
General Electric Co., Statement of Financial Position, Property, Plant and Equipment
USD $ in millions
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | |||||||
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| Land and improvements | |
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| Buildings, structures and related equipment | |
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| Machinery and equipment | |
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| Leasehold costs and manufacturing plant under construction | |
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| GE | |
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| Land and improvements, buildings, structures and related equipment | |
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| Aircraft | |
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| Vehicles | |
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| Construction and manufacturing | |
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| All other | |
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| Equipment leased to others | |
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| GE Capital | |
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| Eliminations | |
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| Property, plant and equipment, original cost | |
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| Accumulated depreciation | |
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| Property, plant and equipment, net carrying value | |
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Based on: 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-27).
| Item | Description | The company |
|---|---|---|
| Property, plant and equipment, original cost | 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. | General Electric Co.’s property, plant and equipment, original cost increased from 2016 to 2017 but then slightly declined from 2017 to 2018 not reaching 2016 level. |
| Property, plant and equipment, net carrying value | 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. | General Electric Co.’s property, plant and equipment, net carrying value increased from 2016 to 2017 but then slightly declined from 2017 to 2018 not reaching 2016 level. |
Property, Plant and Equipment Ratios (Summary)
General Electric Co., Property, Plant and Equipment Ratios
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
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| Estimated total useful life (years) | |
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| Estimated age, time elapsed since purchase (years) | |
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| Estimated remaining life (years) | |
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Based on: 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-27).
| 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. | General Electric Co.’s average age of depreciable property, plant and equipment improved from 2016 to 2017 but then deteriorated significantly from 2017 to 2018. |
| 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. | General Electric Co.’s estimated total useful life of depreciable property, plant and equipment increased from 2016 to 2017 but then declined significantly from 2017 to 2018. |
| Estimated time elapsed since purchase | The approximate age in years of a company’s fixed assets. Useful for comparison purposes. | General Electric Co.’s estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2016 to 2017 and from 2017 to 2018. |
| Estimated remaining life | General Electric Co.’s estimated remaining life of depreciable property, plant and equipment increased from 2016 to 2017 but then declined significantly from 2017 to 2018. |
Average Age
Based on: 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-27).
2018 Calculations
1 Average age = 100 × Accumulated depreciation ÷ (Property, plant and equipment, original cost – Land and improvements)
= 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. | General Electric Co.’s average age of depreciable property, plant and equipment improved from 2016 to 2017 but then deteriorated significantly from 2017 to 2018. |
Estimated Total Useful Life
Based on: 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-27).
2018 Calculations
1 Estimated total useful life (years) = (Property, plant and equipment, original cost – Land and improvements) ÷ Consolidated depreciation and amortization related to property, plant and equipment
= ( – ) ÷ =
| 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. | General Electric Co.’s estimated total useful life of depreciable property, plant and equipment increased from 2016 to 2017 but then declined significantly from 2017 to 2018. |
Estimated Age, Time Elapsed since Purchase
Based on: 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-27).
2018 Calculations
1 Time elapsed since purchase (years) = Accumulated depreciation ÷ Consolidated depreciation and amortization related to property, plant and equipment
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Estimated time elapsed since purchase | The approximate age in years of a company’s fixed assets. Useful for comparison purposes. | General Electric Co.’s estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2016 to 2017 and from 2017 to 2018. |
Estimated Remaining Life
Based on: 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-27).
2018 Calculations
1 Estimated remaining life (years) = (Property, plant and equipment, net carrying value – Land and improvements) ÷ Consolidated depreciation and amortization related to property, plant and equipment
= ( – ) ÷ =
| Ratio | Description | The company |
|---|---|---|
| Estimated remaining life | General Electric Co.’s estimated remaining life of depreciable property, plant and equipment increased from 2016 to 2017 but then declined significantly from 2017 to 2018. |