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General Motors Co. (GM)


Analysis of Property, Plant and Equipment

Difficulty: Advanced


Property, Plant and Equipment Accounting Policy

Property, plant and equipment, including internal use software, is recorded at cost. Major improvements that extend the useful life or add functionality are capitalized. The gross amount of assets under capital leases is included in property, plant and equipment. Expenditures for repairs and maintenance are charged to expense as incurred. General Motors depreciates depreciable property using the straight-line method. Leasehold improvements are amortized over the period of lease or the life of the asset, whichever is shorter. The amortization of the assets under capital leases is included in depreciation expense. Upon retirement or disposition of property, plant and equipment, the cost and related accumulated depreciation are eliminated and any resulting gain or loss is recorded in earnings. Impairment charges related to property are recorded in Automotive and other cost of sales, Automotive and other selling, general and administrative expense or GM Financial interest, operating and other expenses.

Source: 10-K (filing date: 2019-02-06).


Property, Plant and Equipment Disclosure

General Motors Co., Statement of Financial Position, Property, Plant and Equipment

USD $ in millions

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Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Land 1,349  1,647  1,645  1,636  1,695 
Buildings and improvements 9,173  7,471  6,655  5,562  5,236 
Machinery and equipment 26,453  23,915  22,855  19,338  16,788 
Special tools 23,828  21,113  10,932  9,576  7,977 
Construction in progress 4,680  6,188  5,347  4,633  4,114 
Property, gross 41,655  39,221  36,502  31,169  27,833 
Accumulated depreciation (26,725) (24,081) (11,614) (9,516) (8,067)
Property, net 38,758  36,253  35,820  31,229  27,743 

Based on: 10-K (filing date: 2019-02-06), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-07), 10-K (filing date: 2016-02-03), 10-K (filing date: 2015-02-04).

Item Description The company
Property, 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. General Motors Co.’s property, gross increased from 2016 to 2017 and from 2017 to 2018.
Property, 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. General Motors Co.’s property, net increased from 2016 to 2017 and from 2017 to 2018.

Property, Plant and Equipment Ratios (Summary)

General Motors Co., Property, Plant and Equipment Ratios

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Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Average age 66.31% 64.09% 33.32% 32.22% 30.86%
Estimated total useful life (years) 8 8 7 7 6
Estimated age, time elapsed since purchase (years) 5 5 2 2 2
Estimated remaining life (years) 7 7 7 7 6

Based on: 10-K (filing date: 2019-02-06), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-07), 10-K (filing date: 2016-02-03), 10-K (filing date: 2015-02-04).

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 Motors Co.’s average age of depreciable property, plant and equipment deteriorated from 2016 to 2017 and 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 Motors Co.’s estimated total useful life of depreciable property, plant and equipment increased from 2016 to 2017 but then slightly declined 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 Motors Co.’s estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2016 to 2017 and from 2017 to 2018.
Estimated remaining life General Motors Co.’s estimated remaining life of depreciable property, plant and equipment increased from 2016 to 2017 and from 2017 to 2018.

Average Age

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Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Accumulated depreciation 26,725  24,081  11,614  9,516  8,067 
Property, gross 41,655  39,221  36,502  31,169  27,833 
Land 1,349  1,647  1,645  1,636  1,695 
Ratio
Average age1 66.31% 64.09% 33.32% 32.22% 30.86%

Based on: 10-K (filing date: 2019-02-06), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-07), 10-K (filing date: 2016-02-03), 10-K (filing date: 2015-02-04).

2018 Calculations

1 Average age = 100 × Accumulated depreciation ÷ (Property, gross – Land)
= 100 × 26,725 ÷ (41,6551,349) = 66.31%

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 Motors Co.’s average age of depreciable property, plant and equipment deteriorated from 2016 to 2017 and from 2017 to 2018.

Estimated Total Useful Life

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Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Property, gross 41,655  39,221  36,502  31,169  27,833 
Land 1,349  1,647  1,645  1,636  1,695 
Depreciation and amortization expense 5,347  4,966  5,015  4,251  4,187 
Ratio
Estimated total useful life (years)1 8 8 7 7 6

Based on: 10-K (filing date: 2019-02-06), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-07), 10-K (filing date: 2016-02-03), 10-K (filing date: 2015-02-04).

2018 Calculations

1 Estimated total useful life (years) = (Property, gross – Land) ÷ Depreciation and amortization expense
= (41,6551,349) ÷ 5,347 = 8

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 Motors Co.’s estimated total useful life of depreciable property, plant and equipment increased from 2016 to 2017 but then slightly declined from 2017 to 2018.

Estimated Age, Time Elapsed since Purchase

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Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Accumulated depreciation 26,725  24,081  11,614  9,516  8,067 
Depreciation and amortization expense 5,347  4,966  5,015  4,251  4,187 
Ratio
Time elapsed since purchase (years)1 5 5 2 2 2

Based on: 10-K (filing date: 2019-02-06), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-07), 10-K (filing date: 2016-02-03), 10-K (filing date: 2015-02-04).

2018 Calculations

1 Time elapsed since purchase (years) = Accumulated depreciation ÷ Depreciation and amortization expense
= 26,725 ÷ 5,347 = 5

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 Motors Co.’s estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2016 to 2017 and from 2017 to 2018.

Estimated Remaining Life

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Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Property, net 38,758  36,253  35,820  31,229  27,743 
Land 1,349  1,647  1,645  1,636  1,695 
Depreciation and amortization expense 5,347  4,966  5,015  4,251  4,187 
Ratio
Estimated remaining life (years)1 7 7 7 7 6

Based on: 10-K (filing date: 2019-02-06), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-07), 10-K (filing date: 2016-02-03), 10-K (filing date: 2015-02-04).

2018 Calculations

1 Estimated remaining life (years) = (Property, net – Land) ÷ Depreciation and amortization expense
= (38,7581,349) ÷ 5,347 = 7

Ratio Description The company
Estimated remaining life General Motors Co.’s estimated remaining life of depreciable property, plant and equipment increased from 2016 to 2017 and from 2017 to 2018.