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Property, plant and equipment is recorded at historical cost. Depreciation and amortization are recognized on a straight-line basis
over an asset’s estimated useful life. Land is not depreciated and construction in progress is not depreciated until ready for service.
2012 2011 2010
Average
Useful Life
(Years) Gross
Accumulated
Amortization Net Gross
Accumulated
Amortization Net
Amortizable intangible
assets, net
Acquired franchise rights 56–60 $ 931 $ (67) $ 864 $ 916 $ (42) $ 874
Reacquired franchise rights 1–14 110 (68) 42 110 (47) 63
Brands 5–40 1,422 (980) 442 1,417 (945) 472
Other identifiable intangibles 10–24 736 (303) 433 777 (298) 479
$ 3,199 $ (1,418) $ 1,781 $ 3,220 $ (1,332) $ 1,888
Amortization expense $ 119 $ 133 $ 117
Amortization of intangible assets for each of the next five
years, based on existing intangible assets as of December29,
2012 and using average 2012 foreign exchange rates, is
expected to be as follows:
2013 2014 2015 2016 2017
Five-year projected
amortization $110 $95 $86 $78 $72
Depreciable and amortizable assets are only evaluated for
impairment upon a significant change in the operating or
macroeconomic environment. In these circumstances, if an
evaluation of the undiscounted cash flows indicates impair-
ment, the asset is written down to its estimated fair value,
which is based on discounted future cash flows. Useful lives
are periodically evaluated to determine whether events or
circumstances have occurred which indicate the need for revi-
sion. For additional unaudited information on our policies for
amortizable brands, see “Our Critical Accounting Policies” in
Management’s Discussion and Analysis.
2012 PEPSICO ANNUAL REPORT82
Notes to Consolidated Financial Statements