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Microsoft Excel LibreOffice Calc

Nike Inc. (NKE)


Analysis of Property, Plant and Equipment

Difficulty: Advanced


Property, Plant and Equipment Accounting Policy

Property, plant and equipment are recorded at cost. Depreciation is determined on a straight-line basis for land improvements, buildings and leasehold improvements over 2 to 40 years and for machinery and equipment over 2 to 15 years.

Depreciation and amortization of assets used in manufacturing, warehousing and product distribution are recorded in Cost of sales. Depreciation and amortization of all other assets are recorded in Operating overhead expense.

SOFTWARE DEVELOPMENT COSTS

Internal Use Software: Expenditures for major software purchases and software developed for internal use are capitalized and amortized over a 2 to 12-year period on a straight-line basis. NIKE’s policy provides for the capitalization of external direct costs associated with developing or obtaining internal use computer software. In addition, NIKE also capitalizes certain payroll and payroll-related costs for employees who are directly associated with internal use computer software projects. The amount of capitalizable payroll costs with respect to these employees is limited to the time directly spent on such projects. Costs associated with preliminary project stage activities, training, maintenance and all other post-implementation stage activities are expensed as incurred.

Computer Software to be Sold, Leased or Otherwise Marketed: Development costs of computer software to be sold, leased or otherwise marketed as an integral part of a product are subject to capitalization beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers. In most instances, NIKE’s products are released soon after technological feasibility has been established. Therefore, software development costs incurred subsequent to achievement of technological feasibility are usually not significant, and generally most software development costs have been expensed as incurred.

Source: 10-K (filing date: 2019-07-23).


Property, Plant and Equipment Disclosure

Nike Inc., Statement of Financial Position, Property, Plant and Equipment

USD $ in millions

Microsoft Excel LibreOffice Calc

Based on: 10-K (filing date: 2019-07-23), 10-K (filing date: 2018-07-25), 10-K (filing date: 2017-07-20), 10-K (filing date: 2016-07-21), 10-K (filing date: 2015-07-23), 10-K (filing date: 2014-07-25).

Item Description The company
Property, plant and equipment, 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. Nike Inc.’s property, plant and equipment, gross 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. Nike Inc.’s property, plant and equipment, net increased from 2017 to 2018 and from 2018 to 2019.

Property, Plant and Equipment Ratios (Summary)

Nike Inc., Property, Plant and Equipment Ratios

Microsoft Excel LibreOffice Calc
May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015 May 31, 2014
Average age hidden hidden hidden hidden hidden hidden
Estimated total useful life (years) hidden hidden hidden hidden hidden hidden
Estimated age, time elapsed since purchase (years) hidden hidden hidden hidden hidden hidden
Estimated remaining life (years) hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-07-23), 10-K (filing date: 2018-07-25), 10-K (filing date: 2017-07-20), 10-K (filing date: 2016-07-21), 10-K (filing date: 2015-07-23), 10-K (filing date: 2014-07-25).

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. Nike Inc.’s average age of depreciable property, plant and equipment deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 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. Nike Inc.’s estimated total useful life of depreciable property, plant and equipment increased from 2017 to 2018 and from 2018 to 2019.
Estimated time elapsed since purchase The approximate age in years of a company’s fixed assets. Useful for comparison purposes. Nike Inc.’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 Nike Inc.’s estimated remaining life of depreciable property, plant and equipment increased from 2017 to 2018 and from 2018 to 2019.

Average Age

Microsoft Excel LibreOffice Calc
May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015 May 31, 2014
Selected Financial Data (USD $ in millions)
Accumulated depreciation hidden hidden hidden hidden hidden hidden
Property, plant and equipment, gross hidden hidden hidden hidden hidden hidden
Land and improvements hidden hidden hidden hidden hidden hidden
Ratio
Average age1 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-07-23), 10-K (filing date: 2018-07-25), 10-K (filing date: 2017-07-20), 10-K (filing date: 2016-07-21), 10-K (filing date: 2015-07-23), 10-K (filing date: 2014-07-25).

2019 Calculations

1 Average age = 100 × Accumulated depreciation ÷ (Property, plant and equipment, gross – Land and improvements)
= 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. Nike Inc.’s average age of depreciable property, plant and equipment deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.

Estimated Total Useful Life

Microsoft Excel LibreOffice Calc
May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015 May 31, 2014
Selected Financial Data (USD $ in millions)
Property, plant and equipment, gross hidden hidden hidden hidden hidden hidden
Land and improvements hidden hidden hidden hidden hidden hidden
Depreciation expense hidden hidden hidden hidden hidden hidden
Ratio
Estimated total useful life (years)1 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-07-23), 10-K (filing date: 2018-07-25), 10-K (filing date: 2017-07-20), 10-K (filing date: 2016-07-21), 10-K (filing date: 2015-07-23), 10-K (filing date: 2014-07-25).

2019 Calculations

1 Estimated total useful life (years) = (Property, plant and equipment, gross – Land and improvements) ÷ Depreciation expense
= (hiddenhidden) ÷ hidden = hidden

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. Nike Inc.’s estimated total useful life of depreciable property, plant and equipment increased from 2017 to 2018 and from 2018 to 2019.

Estimated Age, Time Elapsed since Purchase

Microsoft Excel LibreOffice Calc
May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015 May 31, 2014
Selected Financial Data (USD $ in millions)
Accumulated depreciation hidden hidden hidden hidden hidden hidden
Depreciation expense hidden hidden hidden hidden hidden hidden
Ratio
Time elapsed since purchase (years)1 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-07-23), 10-K (filing date: 2018-07-25), 10-K (filing date: 2017-07-20), 10-K (filing date: 2016-07-21), 10-K (filing date: 2015-07-23), 10-K (filing date: 2014-07-25).

2019 Calculations

1 Time elapsed since purchase (years) = Accumulated depreciation ÷ Depreciation expense
= hidden ÷ hidden = hidden

Ratio Description The company
Estimated time elapsed since purchase The approximate age in years of a company’s fixed assets. Useful for comparison purposes. Nike Inc.’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

Microsoft Excel LibreOffice Calc
May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015 May 31, 2014
Selected Financial Data (USD $ in millions)
Property, plant and equipment, net hidden hidden hidden hidden hidden hidden
Land and improvements hidden hidden hidden hidden hidden hidden
Depreciation expense hidden hidden hidden hidden hidden hidden
Ratio
Estimated remaining life (years)1 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-07-23), 10-K (filing date: 2018-07-25), 10-K (filing date: 2017-07-20), 10-K (filing date: 2016-07-21), 10-K (filing date: 2015-07-23), 10-K (filing date: 2014-07-25).

2019 Calculations

1 Estimated remaining life (years) = (Property, plant and equipment, net – Land and improvements) ÷ Depreciation expense
= (hiddenhidden) ÷ hidden = hidden

Ratio Description The company
Estimated remaining life Nike Inc.’s estimated remaining life of depreciable property, plant and equipment increased from 2017 to 2018 and from 2018 to 2019.