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Microsoft Excel LibreOffice Calc

Home Depot Inc. (HD)


Analysis of Property, Plant and Equipment

Difficulty: Advanced


Property, Plant and Equipment Accounting Policy

Buildings, furniture, fixtures, and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives. Leasehold improvements are amortized using the straight-line method over the original term of the lease or the useful life of the improvement, whichever is shorter. The estimated useful lives of Home Depot’s property and equipment follow.

Life
Buildings 5 – 45 years
Furniture, fixtures and equipment 2 – 20 years
Leasehold improvements 5 – 45 years

Home Depot capitalizes certain costs related to the acquisition and development of software and amortizes these costs using the straight-line method over the estimated useful life of the software, which is three to six years. Certain development costs not meeting the criteria for capitalization are expensed as incurred.

Home Depot evaluates the long-lived assets each quarter for indicators of potential impairment. Indicators of impairment include current period losses combined with a history of losses, Home Depot’s decision to relocate or close a store or other location before the end of its previously estimated useful life, or when changes in other circumstances indicate the carrying amount of an asset may not be recoverable. The evaluation for long-lived assets is performed at the lowest level of identifiable cash flows, which is generally the individual store level. The assets of a store with indicators of impairment are evaluated for recoverability by comparing its undiscounted future cash flows with its carrying value. If the carrying value is greater than the undiscounted future cash flows, Home Depot then measures the asset’s fair value to determine whether an impairment loss should be recognized. If the resulting fair value is less than the carrying value, an impairment loss is recognized for the difference between the carrying value and the estimated fair value. Impairment losses are recorded as a component of SG&A. When a leased location closes, Home Depot also recognizes, in SG&A, the net present value of future lease obligations less estimated sublease income. Impairments and lease obligation costs on closings and relocations were not material to Home Depot’s consolidated financial statements in fiscal 2017, 2016, or 2015.

Source: 10-K (filing date: 2018-03-22).


Property, Plant and Equipment Disclosure

Home Depot Inc., Statement of Financial Position, Property, Plant and Equipment

USD $ in millions

Microsoft Excel LibreOffice Calc

Based on: 10-K (filing date: 2018-03-22), 10-K (filing date: 2017-03-23), 10-K (filing date: 2016-03-24), 10-K (filing date: 2015-03-26), 10-K (filing date: 2014-03-27), 10-K (filing date: 2013-03-28).

Item Description The company
Property and equipment, at 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. Home Depot Inc.’s property and equipment, at cost increased from 2016 to 2017 and from 2017 to 2018.
Net property and equipment 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. Home Depot Inc.’s net property and equipment declined from 2016 to 2017 but then increased from 2017 to 2018 not reaching 2016 level.

Property, Plant and Equipment Ratios (Summary)

Home Depot Inc., Property, Plant and Equipment Ratios

Microsoft Excel LibreOffice Calc
Jan 28, 2018 Jan 29, 2017 Jan 31, 2016 Feb 1, 2015 Feb 2, 2014 Feb 3, 2013
Average age hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-03-22), 10-K (filing date: 2017-03-23), 10-K (filing date: 2016-03-24), 10-K (filing date: 2015-03-26), 10-K (filing date: 2014-03-27), 10-K (filing date: 2013-03-28).

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. Home Depot Inc.’s average age of depreciable property, plant and equipment deteriorated from 2016 to 2017 and from 2017 to 2018.

Average Age

Microsoft Excel LibreOffice Calc
Jan 28, 2018 Jan 29, 2017 Jan 31, 2016 Feb 1, 2015 Feb 2, 2014 Feb 3, 2013
Selected Financial Data (USD $ in millions)
Accumulated depreciation and amortization hidden hidden hidden hidden hidden hidden
Property and equipment, at cost hidden hidden hidden hidden hidden hidden
Land hidden hidden hidden hidden hidden hidden
Ratio
Average age1 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-03-22), 10-K (filing date: 2017-03-23), 10-K (filing date: 2016-03-24), 10-K (filing date: 2015-03-26), 10-K (filing date: 2014-03-27), 10-K (filing date: 2013-03-28).

2018 Calculations

1 Average age = 100 × Accumulated depreciation and amortization ÷ (Property and equipment, at cost – Land)
= 100 × hidden ÷ (hiddenhidden) = hidden

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. Home Depot Inc.’s average age of depreciable property, plant and equipment deteriorated from 2016 to 2017 and from 2017 to 2018.