DuPont 2007 Annual Report Download - page 66

Cash and Cash Equivalents
Cash equivalents represent investments with maturities of three months or less from time of purchase. They are
carried at cost plus accrued interest, which approximates fair value because of the short-term maturity of these
instruments.
Investments in Securities
Marketable securities represent investments in fixed and floating rate financial instruments with maturities of twelve
months or less from time of purchase. They are classified as held-to-maturity and recorded at amortized cost.
Other assets include long-term investments in securities, which comprise investments for which market values are
not readily available (cost investments) and available-for-sale securities that are reported at fair value (see Note 13).
Inventories
The majority of the company’s inventories are valued at cost, as determined by the last-in, first-out (LIFO) method; in
the aggregate, such valuations are not in excess of market. Seed inventories are valued at the lower of cost, as
determined by the first-in, first-out (FIFO) method, or market.
Elements of cost in inventories include raw materials, direct labor and manufacturing overhead. Stores and supplies
are valued at cost or market, whichever is lower; cost is generally determined by the average cost method.
Property, Plant and Equipment
Property, plant and equipment (PP&E) is carried at cost and is depreciated using the straight-line method. PP&E
placed in service prior to 1995 is depreciated under the sum-of-the-years’ digits method or other substantially similar
methods. Substantially all equipment and buildings are depreciated over useful lives ranging from 15 to 25 years.
Capitalizable costs associated with computer software for internal use are amortized on a straight-line basis over 5
to 7 years. When assets are surrendered, retired, sold or otherwise disposed of, their gross carrying values and
related accumulated depreciation are removed from the accounts and included in determining gain or loss on such
disposals.
Maintenance and repairs are charged to operations; replacements and improvements are capitalized.
Goodwill and Other Intangible Assets
Goodwill and indefinite-lived intangible assets are tested for impairment at least annually; however, these tests are
performed more frequently when events or changes in circumstances indicate the carrying value may not be
recoverable. The company’s fair value methodology is based on quoted market prices, if available. If quoted market
prices are not available, an estimate of fair market value is made based on prices of similar assets or other valuation
methodologies including present value techniques. Impairment losses are included in Cost of goods sold and other
operating charges.
Definite-lived intangible assets, such as purchased and licensed technology, patents and customer lists are
amortized over their estimated useful lives, generally for periods ranging from 5 to 20 years. The company
continually evaluates the reasonableness of the useful lives of these assets. Once these assets are fully
amortized, they are removed from the Consolidated Balance Sheets.
Impairment of Long-Lived Assets
The company evaluates the carrying value of long-lived assets to be held and used when events or changes in
circumstances indicate the carrying value may not be recoverable. The carrying value of a long-lived asset is
considered impaired when the total projected undiscounted cash flows from such asset are separately identifiable
and are less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying
value exceeds the fair market value of the long-lived asset. The company’s fair value methodology is based on
quoted market prices, if available. If quoted market prices are not available, an estimate of fair market value is made
based on prices of similar assets or other valuation methodologies including present value techniques. Long-lived
assets to be disposed of other than by sale are classified as held for use until their disposal. Long-lived assets to be
F-9
E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)