Ford 2011 Annual Report Download - page 127

Notes to the Financial Statements
Ford Motor Company | 2011 Annual Report 125
NOTE 14. NET PROPERTY AND LEASE COMMITMENTS
Net Property
Net property includes land, buildings and land improvements, machinery and equipment, special tools, and other
assets that we use in our normal operations. These assets are recorded at cost, net of accumulated depreciation and
impairments. We capitalize new assets when we expect to use the asset for more than one year and the acquisition cost
is greater than $2,500. Routine maintenance and repair costs are expensed when incurred.
Property and equipment are depreciated primarily using the straight-line method over the estimated useful life of the
asset. Useful lives range from 3 years to 36 years. The estimated useful lives generally are 14.5 years for machinery and
equipment, 3 years for software (8 years for mainframe and client based software), and 30 years for buildings and land
improvements. Special tools generally are amortized over the expected life of a product program using a straight-line
method. If the expected production volumes for major product programs associated with the tools decline significantly, we
accelerate the amortization reflecting the rate of decline.
Net property at December 31 was as follows (in millions):
Automotive Sector
Land
Buildings and land improvements
Machinery, equipment and other
Software
Construction in progress
Total land, plant and equipment and other
Accumulated depreciation
Net land, plant and equipment and other
Special tools, net of amortization
Total Automotive sector
Financial Services sector (a)
Total Company
2011
$384
10,129
34,363
1,917
1,311
48,104
(32,874)
15,230
6,999
22,229
142
$22,371
2010
$336
10,348
35,780
1,888
1,102
49,454
(33,900)
15,554
7,473
23,027
152
$ 23,179
__________
(a) Included in Financial Services other assets on our sector balance sheet.
Automotive sector property-related expenses for the years ended December 31 were as follows (in millions):
Depreciation and other amortization
Amortization of special tools
Total
Maintenance and rearrangement
2011
$1,759
1,774
$3,533
$1,431
2010
$1,956
1,920
$3,876
$1,397
2009
$ 1,913
1,830
$ 3,743
$ 1,230
Conditional Asset Retirement Obligations
Included in our carrying value is the estimated cost for legal obligations to retire, abandon, or dispose of the
asset. These conditional asset retirement obligations relate to the estimated cost for asbestos abatement and PCB
removal.
Asbestos abatement was estimated using site-specific surveys where available and a per/square foot estimate where
surveys were unavailable. PCB removal costs were based on historical removal costs per transformer and applied to
transformers identified by a PCB transformer global survey we conducted.