Intel 2008 Annual Report Download - page 72

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Table of Contents
INTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Securities Lending
We may enter into securities lending agreements with financial institutions, generally to facilitate hedging and certain
investment transactions. Selected securities may be loaned, secured by collateral in the form of cash or securities. The loaned
securities continue to be carried as investment assets on our consolidated balance sheets. Cash collateral is recorded as an asset
with a corresponding liability. For lending agreements collateralized by securities, we do not record the collateral as an asset
or a liability, unless the collateral is repledged.
Inventories
We compute inventory cost on a currently adjusted standard basis (which approximates actual cost on an average or
first-in, first-out basis). The valuation of inventory requires us to estimate obsolete or excess inventory as well as inventory
that is not of saleable quality. The determination of obsolete or excess inventory requires us to estimate the future demand for
our products. It is reasonably possible that our estimate of future demand for our products could change in the near term and
result in additional inventory write-offs, which would negatively impact our gross margin. Inventory in excess of saleable
amounts is not valued, and the remaining inventory is valued at the lower of cost or market. Inventories at fiscal year-ends
were as follows:
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 using the straight-line method over the following estimated useful lives: machinery and equipment, 2 to 4
years; buildings, 4 to 40 years. We regularly perform reviews 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. For a
discussion of restructuring-related asset impairment charges, see “Note 15: Restructuring and Asset Impairment Charges.”
We identify property, plant and equipment as held for sale when it meets the criteria of 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.
64
(In Millions)
2008
2007
Raw materials
$
608
$
507
Work in process
1,577
1,460
Finished goods
1,559
1,403
Total inventories
$
3,744
$
3,370
(In Millions)
2008
2007
Land and buildings
$
16,546
$
15,267
Machinery and equipment
28,812
27,754
Construction in progress
2,730
3,031
48,088
46,052
Less:
accumulated depreciation
(30,544
)
(29,134
)
Total property, plant and equipment, net
$
17,544
$
16,918