Merck & Co. Inc. (MRK)

Depreciation

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 $1.5 billion in 2017, $1.6 billion in 2016 and $1.6 billion in 2015.

Source: 10-K (filing date: 2018-02-27).

Merck & Co. Inc., Statement of Financial Position, Property, Plant and Equipment

USD $ in millions

Based on: 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), 10-K (filing date: 2014-02-27).

Item	Description	The company
Land	Carrying amount as of the balance sheet date of real estate held for productive use. This excludes land held for sale.	Merck & Co. Inc.'s land declined from 2015 to 2016 and from 2016 to 2017.
Buildings	Carrying amount as of the balance sheet date of long-lived, depreciable assets that include building structures held for productive use including any addition, improvement, or renovation to the structure, such as interior masonry, interior flooring, electrical, and plumbing.	Merck & Co. Inc.'s buildings declined from 2015 to 2016 but then slightly increased from 2016 to 2017.
Machinery, equipment and office furnishings	Carrying amount as of the balance sheet date of long-lived, depreciable asset used in production process to produce goods and services.	Merck & Co. Inc.'s machinery, equipment and office furnishings declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.
Construction in progress	Carrying amount at the balance sheet date of long-lived asset under construction that include construction costs to date on capital projects that have not been completed and assets being constructed that are not ready to be placed into service.	Merck & Co. Inc.'s construction in progress increased from 2015 to 2016 and from 2016 to 2017.
Property, plant and equipment, at cost	Carrying amount at the balance sheet date for long-lived physical assets used in the normal conduct of business and not intended for resale. This can include land, physical structures, machinery, vehicles, furniture, computer equipment, construction in progress, and similar items. Amount does not include depreciation.	Merck & Co. Inc.'s property, plant and equipment, at cost declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.
Property, plant and equipment, less accumulated depreciation	Tangible assets that are held by an entity for use in the production or supply of goods and services, for rental to others, or for administrative purposes and that are expected to provide economic benefit for more than one year; net of accumulated depreciation. Examples include land, buildings, and production equipment.	Merck & Co. Inc.'s property, plant and equipment, less accumulated depreciation declined from 2015 to 2016 but then increased from 2016 to 2017 not reaching 2015 level.

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

Based on: 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), 10-K (filing date: 2014-02-27).

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 2015 to 2016 and from 2016 to 2017.
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 declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.
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 improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017.
Estimated remaining life		Merck & Co. Inc.'s estimated remaining life of depreciable property, plant and equipment declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.

Based on: 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), 10-K (filing date: 2014-02-27).

2017 Calculations

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 2015 to 2016 and from 2016 to 2017.

Based on: 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), 10-K (filing date: 2014-02-27).

2017 Calculations

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 declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.

Based on: 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), 10-K (filing date: 2014-02-27).

2017 Calculations

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 improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017.

Based on: 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), 10-K (filing date: 2014-02-27).

2017 Calculations

Ratio	Description	The company
Estimated remaining life		Merck & Co. Inc.'s estimated remaining life of depreciable property, plant and equipment declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.