Energy Transfer 2012 Annual Report Download - page 161

F - 16
applicable. Expenditures for maintenance and repairs that do not add capacity or extend the useful life are expensed as incurred.
Expenditures to refurbish assets that either extend the useful lives of the asset or prevent environmental contamination are
capitalized and depreciated over the remaining useful life of the asset. Additionally, we capitalize certain costs directly related
to the construction of assets including internal labor costs, interest and engineering costs. Upon disposition or retirement of
pipeline components or natural gas plant components, any gain or loss is recorded to accumulated depreciation. When entire
pipeline systems, gas plants or other property and equipment are retired or sold, any gain or loss is included in our consolidated
statements of operations.
We review property, plant and equipment for impairment whenever events or changes in circumstances indicate that the
carrying amount of such assets may not be recoverable. If such a review should indicate that the carrying amount of long-
lived assets is not recoverable, we reduce the carrying amount of such assets to fair value. A write down of the carrying
amounts of the Canyon assets to their fair values was recorded for approximately $128 million during the year ended
December 31, 2012.
Capitalized interest is included for pipeline construction projects, except for certain interstate projects for which an allowance
for funds used during construction (“AFUDC”) is accrued. Interest is capitalized based on the current borrowing rate of our
revolving credit facility when the related costs are incurred. AFUDC is calculated under guidelines prescribed by the FERC
and capitalized as part of the cost of utility plant for interstate projects. It represents the cost of servicing the capital invested
in construction work-in-process. AFUDC is segregated into two component parts – borrowed funds and equity funds.
Components and useful lives of property, plant and equipment were as follows:
December 31,
2012 2011
Land and improvements $ 551 $ 136
Buildings and improvements (5 to 40 years) 568 268
Pipelines and equipment (5 to 83 years) 17,031 9,174
Natural gas and NGL storage facilities (5 to 46 years) 1,057 790
Bulk storage, equipment and facilities (3 to 83 years) 1,745 977
Tanks and other equipment (10 to 40 years) 1,187 643
Retail equipment (3 to 99 years) 258 —
Vehicles (3 to 25 years) 77 214
Right of way (20 to 83 years) 2,042 734
Furniture and fixtures (3 to 12 years) 48 47
Linepack 116 57
Pad gas 58 58
Other (2 to 19 years) 986 154
Construction work-in-process 1,688 732
27,412 13,984
Less – Accumulated depreciation (1,639)(1,678)
Property, plant and equipment, net $ 25,773 $ 12,306
We recognized the following amounts of depreciation expense for the periods presented:
Years Ended December 31,
2012 2011 2010
Depreciation expense (1) $ 615 $ 380 $ 297
Capitalized interest, excluding AFUDC $ 99 $ 11 $ 3
(1) Depreciation expense amounts have been restated by $26 million and $25 million for years ended December 31, 2011
and 2010, respectively, to present Canyon's operations as discontinued operations.
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