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Medtronic PLC (MDT)


Analysis of Property, Plant and Equipment

Advanced level


Accounting Policy on Property, Plant and Equipment

Property, plant, and equipment is stated at cost. Additions and improvements that extend the lives of the assets are capitalized, while expenditures for repairs and maintenance are expensed as incurred. Medtronic assesses property, plant, and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of property, plant, and equipment asset groupings may not be recoverable. Medtronic utilizes the straight-line method of depreciation over the estimated useful lives of the various assets. The cost of interest that is incurred in connection with ongoing construction projects is capitalized using a weighted average interest rate. These costs are included in property, plant, and equipment and amortized over the useful life of the related asset. Upon retirement or disposal of property, plant, and equipment, the costs and related amounts of accumulated depreciation or amortization are eliminated from the asset and accumulated depreciation accounts. The difference, if any, between the net asset value and the proceeds, is recognized in earnings.

Source: 10-K (filing date: 2019-06-21).


Property, Plant and Equipment Disclosure

Medtronic PLC, balance sheet: property, plant and equipment

US$ in millions

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Apr 26, 2019 Apr 27, 2018 Apr 28, 2017 Apr 29, 2016 Apr 24, 2015 Apr 25, 2014
Equipment 5,519  5,171  6,435  6,328  5,649  4,409 
Computer software 1,842  1,578  —  —  —  — 
Land and land improvements 181  187  186  215  217  152 
Buildings and leasehold improvements 2,267  2,265  2,175  2,394  2,314  1,565 
Construction in progress 1,111  1,058  895  777  683  313 
Property, plant, and equipment, at cost 10,920  10,259  9,691  9,714  8,863  6,439 
Accumulated depreciation (6,245) (5,655) (5,330) (4,873) (4,164) (4,047)
Property, plant, and equipment, net 4,675  4,604  4,361  4,841  4,699  2,392 

Based on: 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-28), 10-K (filing date: 2015-06-23), 10-K (filing date: 2014-06-20).

Item Description The company
Property, plant, 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. Medtronic PLC’s property, plant, and equipment, at cost increased from 2017 to 2018 and from 2018 to 2019.
Property, plant, and equipment, 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. Medtronic PLC’s property, plant, and equipment, net increased from 2017 to 2018 and from 2018 to 2019.

Asset Age Ratios (Summary)

Medtronic PLC, asset age ratios

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Apr 26, 2019 Apr 27, 2018 Apr 28, 2017 Apr 29, 2016 Apr 24, 2015 Apr 25, 2014
Average age ratio 58.15% 56.15% 56.08% 51.30% 48.16% 64.37%
Estimated total useful life (years) 12 12 10 11 15 13
Estimated age, time elapsed since purchase (years) 7 7 6 5 7 8
Estimated remaining life (years) 5 5 4 5 8 4

Based on: 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-28), 10-K (filing date: 2015-06-23), 10-K (filing date: 2014-06-20).

Asset age ratio Description The company
Average age ratio 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. Medtronic PLC’s average age ratio of depreciable property, plant and equipment deteriorated from 2017 to 2018 and from 2018 to 2019.
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. Medtronic PLC’s estimated total useful life of depreciable property, plant and equipment increased from 2017 to 2018 but then slightly decreased from 2018 to 2019.
Estimated time elapsed since purchase The approximate age in years of a company’s fixed assets. Useful for comparison purposes. Medtronic PLC’s estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2017 to 2018 and from 2018 to 2019.
Estimated remaining life Medtronic PLC’s estimated remaining life of depreciable property, plant and equipment increased from 2017 to 2018 but then slightly decreased from 2018 to 2019.

Average Age

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Apr 26, 2019 Apr 27, 2018 Apr 28, 2017 Apr 29, 2016 Apr 24, 2015 Apr 25, 2014
Selected Financial Data (US$ in millions)
Accumulated depreciation 6,245  5,655  5,330  4,873  4,164  4,047 
Property, plant, and equipment, at cost 10,920  10,259  9,691  9,714  8,863  6,439 
Land and land improvements 181  187  186  215  217  152 
Asset Age Ratio
Average age1 58.15% 56.15% 56.08% 51.30% 48.16% 64.37%

Based on: 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-28), 10-K (filing date: 2015-06-23), 10-K (filing date: 2014-06-20).

2019 Calculations

1 Average age = 100 × Accumulated depreciation ÷ (Property, plant, and equipment, at cost – Land and land improvements)
= 100 × 6,245 ÷ (10,920181) = 58.15%

Asset age 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. Medtronic PLC’s average age ratio of depreciable property, plant and equipment deteriorated from 2017 to 2018 and from 2018 to 2019.

Estimated Total Useful Life

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Apr 26, 2019 Apr 27, 2018 Apr 28, 2017 Apr 29, 2016 Apr 24, 2015 Apr 25, 2014
Selected Financial Data (US$ in millions)
Property, plant, and equipment, at cost 10,920  10,259  9,691  9,714  8,863  6,439 
Land and land improvements 181  187  186  215  217  152 
Depreciation expense 895  821  937  889  573  501 
Asset Age Ratio (Years)
Estimated total useful life1 12 12 10 11 15 13

Based on: 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-28), 10-K (filing date: 2015-06-23), 10-K (filing date: 2014-06-20).

2019 Calculations

1 Estimated total useful life = (Property, plant, and equipment, at cost – Land and land improvements) ÷ Depreciation expense
= (10,920181) ÷ 895 = 12

Asset age 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. Medtronic PLC’s estimated total useful life of depreciable property, plant and equipment increased from 2017 to 2018 but then slightly decreased from 2018 to 2019.

Estimated Age, Time Elapsed since Purchase

Microsoft Excel LibreOffice Calc
Apr 26, 2019 Apr 27, 2018 Apr 28, 2017 Apr 29, 2016 Apr 24, 2015 Apr 25, 2014
Selected Financial Data (US$ in millions)
Accumulated depreciation 6,245  5,655  5,330  4,873  4,164  4,047 
Depreciation expense 895  821  937  889  573  501 
Asset Age Ratio (Years)
Time elapsed since purchase1 7 7 6 5 7 8

Based on: 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-28), 10-K (filing date: 2015-06-23), 10-K (filing date: 2014-06-20).

2019 Calculations

1 Time elapsed since purchase = Accumulated depreciation ÷ Depreciation expense
= 6,245 ÷ 895 = 7

Asset age ratio Description The company
Estimated time elapsed since purchase The approximate age in years of a company’s fixed assets. Useful for comparison purposes. Medtronic PLC’s estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2017 to 2018 and from 2018 to 2019.

Estimated Remaining Life

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Apr 26, 2019 Apr 27, 2018 Apr 28, 2017 Apr 29, 2016 Apr 24, 2015 Apr 25, 2014
Selected Financial Data (US$ in millions)
Property, plant, and equipment, net 4,675  4,604  4,361  4,841  4,699  2,392 
Land and land improvements 181  187  186  215  217  152 
Depreciation expense 895  821  937  889  573  501 
Asset Age Ratio (Years)
Estimated remaining life1 5 5 4 5 8 4

Based on: 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-28), 10-K (filing date: 2015-06-23), 10-K (filing date: 2014-06-20).

2019 Calculations

1 Estimated remaining life = (Property, plant, and equipment, net – Land and land improvements) ÷ Depreciation expense
= (4,675181) ÷ 895 = 5

Asset age ratio Description The company
Estimated remaining life Medtronic PLC’s estimated remaining life of depreciable property, plant and equipment increased from 2017 to 2018 but then slightly decreased from 2018 to 2019.