Depreciation is provided over the estimated useful lives of the assets, principally using the straight-line method. For tax purposes, accelerated tax methods are used. The estimated useful lives primarily range from 25 to 45 years for Buildings, and from 3 to 15 years for Machinery, equipment and office furnishings. Depreciation expense was $1.4 billion in 2018, $1.5 billion in 2017 and $1.6 billion in 2016.

Source: 10-K (filing date: 2019-02-27).

Merck & Co. Inc., balance sheet: property, plant and equipment

US$ in millions

	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
Land	333	365	412	490	541
Buildings	11,486	11,726	11,439	12,154	13,101
Machinery, equipment and office furnishings	14,441	14,649	14,053	14,261	16,050
Construction in progress	3,355	2,301	1,871	1,525	1,448
Property, plant and equipment, at cost	29,615	29,041	27,775	28,430	31,140
Accumulated depreciation	(16,324)	(16,602)	(15,749)	(15,923)	(18,004)
Property, plant and equipment, at cost, net of accumulated depreciation	13,291	12,439	12,026	12,507	13,136

Based on: 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-27).

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.	Merck & Co. Inc.’s property, plant and equipment, at cost increased from 2016 to 2017 and from 2017 to 2018.
Property, plant and equipment, at cost, net of accumulated depreciation	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.	Merck & Co. Inc.’s property, plant and equipment, at cost, net of accumulated depreciation increased from 2016 to 2017 and from 2017 to 2018.

Merck & Co. Inc., Property, Plant and Equipment Ratios

	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
Average age	55.75%	57.90%	57.56%	56.99%	58.84%
Estimated total useful life (years)	21	19	17	17	12
Estimated age, time elapsed since purchase (years)	12	11	10	10	7
Estimated remaining life (years)	9	8	7	8	5

Based on: 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 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.	Merck & Co. Inc.’s average age of depreciable property, plant and equipment deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.
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.	Merck & Co. Inc.’s estimated total useful life of depreciable property, plant and equipment increased from 2016 to 2017 and from 2017 to 2018.
Estimated time elapsed since purchase	The approximate age in years of a company’s fixed assets. Useful for comparison purposes.	Merck & Co. Inc.’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		Merck & Co. Inc.’s estimated remaining life of depreciable property, plant and equipment increased from 2016 to 2017 and from 2017 to 2018.

	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
Selected Financial Data (US$ in millions)
Accumulated depreciation	16,324	16,602	15,749	15,923	18,004
Property, plant and equipment, at cost	29,615	29,041	27,775	28,430	31,140
Land	333	365	412	490	541
Ratio
Average age¹	55.75%	57.90%	57.56%	56.99%	58.84%

Based on: 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 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, at cost – Land)
= 100 × 16,324 ÷ (29,615 – 333) = 55.75%

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.	Merck & Co. Inc.’s average age of depreciable property, plant and equipment deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.

	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
Selected Financial Data (US$ in millions)
Property, plant and equipment, at cost	29,615	29,041	27,775	28,430	31,140
Land	333	365	412	490	541
Depreciation expense	1,400	1,500	1,600	1,600	2,500
Ratio
Estimated total useful life (years)¹	21	19	17	17	12

Based on: 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 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, at cost – Land) ÷ Depreciation expense
= (29,615 – 333) ÷ 1,400 = 21

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.	Merck & Co. Inc.’s estimated total useful life of depreciable property, plant and equipment increased from 2016 to 2017 and from 2017 to 2018.

	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
Selected Financial Data (US$ in millions)
Accumulated depreciation	16,324	16,602	15,749	15,923	18,004
Depreciation expense	1,400	1,500	1,600	1,600	2,500
Ratio
Time elapsed since purchase (years)¹	12	11	10	10	7

Based on: 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-27).

2018 Calculations

¹ Time elapsed since purchase (years) = Accumulated depreciation ÷ Depreciation expense
= 16,324 ÷ 1,400 = 12

Ratio	Description	The company
Estimated time elapsed since purchase	The approximate age in years of a company’s fixed assets. Useful for comparison purposes.	Merck & Co. Inc.’s estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2016 to 2017 and from 2017 to 2018.

	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
Selected Financial Data (US$ in millions)
Property, plant and equipment, at cost, net of accumulated depreciation	13,291	12,439	12,026	12,507	13,136
Land	333	365	412	490	541
Depreciation expense	1,400	1,500	1,600	1,600	2,500
Ratio
Estimated remaining life (years)¹	9	8	7	8	5

Based on: 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 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, at cost, net of accumulated depreciation – Land) ÷ Depreciation expense
= (13,291 – 333) ÷ 1,400 = 9

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

Merck & Co. Inc. (MRK)

Analysis of Property, Plant and Equipment

Property, Plant and Equipment Accounting Policy

Property, Plant and Equipment Disclosure

Property, Plant and Equipment Ratios (Summary)

Average Age

Estimated Total Useful Life

Estimated Age, Time Elapsed since Purchase

Estimated Remaining Life