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10-K
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. Basis of presentation and accounting policies (Continued)
estimated useful lives. The Company’s property and equipment balances and depreciable lives are
summarized as follows:
Depreciable January 29, January 30,
(In thousands) Life 2016 2015
Land ............................................ Indefinite $ 188,532 $ 172,329
Land improvements ................................. 20 66,955 55,375
Buildings ......................................... 39 - 40 834,884 800,346
Leasehold improvements .............................. (a) 402,997 361,557
Furniture, fixtures and equipment ....................... 3 - 10 2,526,843 2,295,590
Construction in progress .............................. 150,275 68,360
4,170,486 3,753,557
Less accumulated depreciation and amortization ............. 1,906,424 1,637,482
Net property and equipment ........................... $2,264,062 $2,116,075
(a) Amortized over the lesser of the life of the applicable lease term or the estimated useful life of the
asset.
Depreciation expense related to property and equipment was approximately $350.6 million,
$335.9 million and $315.3 million for 2015, 2014 and 2013. Amortization of capital lease assets is
included in depreciation expense. Interest on borrowed funds during the construction of property and
equipment is capitalized where applicable. Interest costs of $1.4 million, $0.2 million and $1.2 million
were capitalized in 2015, 2014 and 2013.
Impairment of long-lived assets
When indicators of impairment are present, the Company evaluates the carrying value of long-lived
assets, other than goodwill and other indefinite-lived intangible assets, in relation to the operating
performance and future cash flows or the appraised values of the underlying assets. Generally, the
Company’s policy is to review for impairment stores open more than three years for which current cash
flows from operations are negative. Impairment results when the carrying value of the assets exceeds
the undiscounted future cash flows expected to be generated by the assets. The Company’s estimate of
undiscounted future cash flows is based upon historical operations of the stores and estimates of future
store profitability which encompasses many factors that are subject to variability and difficult to predict.
If a long-lived asset is found to be impaired, the amount recognized for impairment is equal to the
difference between the carrying value and the asset’s estimated fair value. The fair value is estimated
based primarily upon estimated future cash flows over the asset’s remaining useful life (discounted at
the Company’s credit adjusted risk-free rate) or other reasonable estimates of fair market value. Assets
to be disposed of are adjusted to the fair value less the cost to sell if less than the book value.
The Company recorded impairment charges included in SG&A expense of approximately
$5.9 million in 2015, $1.9 million in 2014 and $0.5 million in 2013, to reduce the carrying value of
certain of its stores’ assets. Such action was deemed necessary based on the Company’s evaluation that
such amounts would not be recoverable primarily due to insufficient sales or excessive costs resulting in
the carrying value of the assets exceeding the estimated undiscounted future cash flows generated by
the assets at these locations.
48