National Oilwell Varco 2012 Annual Report Download - page 71

Download and view the complete annual report

Please find page 71 of the 2012 National Oilwell Varco annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 115

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115

Index to Financial Statements
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Expenditures for major improvements that extend the lives of property and equipment are capitalized while minor
replacements, maintenance and repairs are charged to operations as incurred. Disposals are removed at cost less accumulated depreciation with any resulting gain or loss
reflected in operations. Depreciation is provided using the straight-line method over the estimated useful lives of individual items. Depreciation expense was $279 million,
$262 million and $249 million for the years ended December 31, 2011, 2010 and 2009, respectively. The estimated useful lives of the major classes of property, plant and
equipment are included in Note 6 to the consolidated financial statements.
Long-lived Assets
We record impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets are impaired and the undiscounted cash flows
estimated to be generated by those assets are less than the carrying amount of those assets. The carrying value of assets used in operations that are not recoverable is reduced
to fair value if lower than carrying value. In determining the fair market value of the assets, we consider market trends and recent transactions involving sales of similar assets,
or when not available, discounted cash flow analysis. There have been no impairments of long-lived assets for the years ended December 31, 2011, 2010 and 2009.
Intangible Assets
The Company has approximately $6.2 billion of goodwill and $0.6 billion of identified intangible assets at December 31, 2011. Generally accepted accounting principles
require the Company to test goodwill and other indefinite-lived intangible assets for impairment at least annually or more frequently whenever events or circumstances occur
indicating that such assets might be impaired.
Goodwill is identified by segment as follows (in millions):
$000,00.00 $000,00.00 $000,00.00 $000,00.00
Rig
Technology
Petroleum
Services &
Supplies Distribution &
Transmission Total
Balance at December 31, 2009 $ 1,567 $ 3,855 $ 67 $ 5,489
Goodwill acquired during period 287 2 9 298
Currency translation adjustments 2 1 3
Balance at December 31, 2010 1,854 3,859 77 5,790
Goodwill acquired during period 117 233 27 377
Currency translation adjustments and other (12) (3) (1) (16)
Balance at December 31, 2011 $ 1,959 $ 4,089 $ 103 $ 6,151
70