Intel 2007 Annual Report Download - page 66

Table of Contents
INTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Property, Plant and Equipment
Property, plant and equipment, net at fiscal year-ends was as follows:
We state property, plant and equipment at cost, less accumulated depreciation. We compute depreciation for financial
reporting purposes principally using the straight-line method over the following estimated useful lives: machinery and
equipment, 2 to 4 years; buildings, 4 to 40 years. Reviews are regularly performed if facts and circumstances indicate that the
carrying amount of assets may not be recoverable or that the useful life is shorter than we had originally estimated. We assess
the recoverability of our assets held for use by comparing the projected undiscounted net cash flows associated with the related
asset or group of assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if
any, is based on the excess of the carrying amount over the fair value of those assets. If we determine that the useful lives are
shorter than we had originally estimated, we depreciate the net book value of the assets over the newly determined remaining
useful lives. See “Note 16: Restructuring and Asset Impairment Charges” for further discussion of restructuring-related asset
impairment charges that we recorded during 2007 and 2006.
We identify property, plant and equipment as held for sale when it meets the criteria of Statement of Financial Accounting
Standards (SFAS) No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets.”
We reclassify held for sale assets
to other current assets and cease recording depreciation.
We capitalize interest on borrowings related to eligible capital expenditures. We add capitalized interest to the cost of qualified
assets and amortize it over the estimated useful lives of the assets. Capital-related government grants earned are recorded as a
reduction to property, plant and equipment.
Goodwill
We record goodwill when the purchase price of an acquisition exceeds the estimated fair value of the net identified tangible
and intangible assets acquired. We perform an annual impairment review for each reporting unit using a fair value approach.
Reporting units may be operating segments as a whole or an operation one level below an operating segment, referred to as a
component. In determining the carrying value of the reporting unit, we have to make an allocation of our manufacturing and
assembly and test assets because of the interchangeable nature of our manufacturing and assembly and test capacity. We base
this allocation on each reporting unit’s relative percentage utilization of the manufacturing and assembly and test assets. In the
event that an individual business within a reporting unit is divested, we allocate goodwill to that business based on its fair
value relative to its reporting unit. For further discussion of goodwill, see “Note 15: Goodwill.”
Identified Intangible Assets
Intellectual property assets primarily represent rights acquired under technology licenses and are generally amortized on a
straight-line basis over the periods of benefit, ranging from 2 to 17 years. We amortize acquisition-related developed
technology on a straight-line basis over approximately 4 years. Other intangible assets include acquisition-related customer
lists and workforce-in-place, which we amortize on a straight-
line basis over periods ranging from 2 to 4 years. We classify all
identified intangible assets within other long-term assets. In the quarter following the period in which identified intangible
assets become fully amortized, the fully amortized balances are removed from the gross asset and accumulated amortization
amounts. For further discussion of identified intangible assets, see “Note 14: Identified Intangible Assets.”
57
(In Millions)
2007
2006
Land and buildings
$
15,267
$
14,544
Machinery and equipment
27,754
29,829
Construction in progress
3,031
2,711
46,052
47,084
Less:
accumulated depreciation
(29,134
)
(29,482
)
Total property, plant and equipment, net
$
16,918
$
17,602