Tesla 2016 Annual Report Download - page 58
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Please find page 58 of the 2016 Tesla 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.Property,PlantandEquipment
Property,plantandequipmentarerecognizedatcostlessaccumulateddepreciation.Depreciationisgenerallycomputedusingthestraight-linemethodover
theestimatedusefullivesoftherelatedassetsasfollows:
Machinery,equipmentandofficefurniture 3to12years
Buildingandbuildingimprovements 30years
Computerequipmentandsoftware 3years
Depreciationfortoolingiscomputedusingtheunits-of-productionmethodwherebycapitalizedcostsareamortizedoverthetotalestimatedproductivelife
oftherelatedassets.AsofDecember31,2015,theestimatedproductivelifefortoolingwas250,000vehiclesbasedonourcurrentestimatesofproduction.
Leaseholdimprovementsareamortizedonastraight-linebasisovertheshorteroftheirestimatedusefullivesorthetermoftherelatedlease.
Upontheretirementorsaleofourproperty,plantandequipment,thecostandrelatedaccumulateddepreciationareremovedfromthebalancesheetandthe
resultinggainorlossisreflectedinoperations.Maintenanceandrepairexpendituresareexpensedasincurred,whilemajorimprovementsthatincreasethe
functionality,outputorexpectedlifeoftheassetarecapitalizedanddepreciatedratablytoexpenseovertheidentifiedusefullife.Landisnotdepreciated.
Interestexpenseonoutstandingdebtiscapitalizedduringtheperiodofsignificantcapitalassetconstruction.Capitalizedinterestonconstructioninprogress
isincludedinproperty,plantandequipment,andisamortizedoverthelifeoftherelatedassets.
OperatingLeaseVehicles
Vehiclesdeliveredunderourresalevalueguaranteeprogram,vehiclesthatareleasedaspartofourleasingprogramsaswellasanyvehiclesthataresold
withasignificantbuy-backguaranteeareclassifiedasoperatingleasevehiclesastherelatedrevenuetransactionsaretreatedasoperatingleases.Operatinglease
vehiclesarerecordedatcostlessaccumulateddepreciation.Depreciationiscomputedusingthestraight-linemethodovertheexpectedoperatingleaseterm.The
totalcostofoperatingleasevehiclesrecordedintheConsolidatedBalanceSheetsasofDecember31,2015and2014was$2.0billionand$849.8million.
AccumulateddepreciationrelatedtoleasedvehiclesasofDecember31,2015and2014was$216.5millionand$83.1million.
Long-livedAssets
Weevaluateourlong-livedassets,includingintangibleassets,forindicatorsofpossibleimpairmentwheneventsorchangesincircumstancesindicatethe
carryingamountofanasset(orassetgroup)maynotberecoverable.Impairmentexistsifthecarryingamountsofsuchassetsexceedtheestimatesoffuturenet
undiscountedcashflowsexpectedtobegeneratedbysuchassets.Shouldimpairmentexist,theimpairmentlosswouldbemeasuredbasedontheexcesscarrying
valueoftheassetovertheasset’sestimatedfairvalue.Wedidnotrecordanymaterialimpairmentlossesonourlong-livedassetsin2015and2014.
ResearchandDevelopmentCosts
Researchanddevelopmentcostsareexpensedasincurred.Researchanddevelopmentexpensesconsistprimarilyofpayroll,benefitsandstock-based
compensationofthoseemployeesengagedinresearch,designanddevelopmentactivities,costsrelatedtodesigntools,licenseexpensesrelatedtointellectual
property,suppliesandservices,depreciationandotheroccupancycosts.
MarketingandPromotionCosts
Marketingandsalespromotioncostsareexpensedasincurred.DuringtheyearsendedDecember31,2015,2014and2013,advertising,promotionand
relatedmarketingexpenseswere$58.3million,$48.9millionand$9.0million.
TransportationCosts
Amountsbilledtocustomersrelatedtoshippingandhandlingareclassifiedasautomotiverevenue,andrelatedtransportationcostsareincludedincostof
automotiverevenues.
IncomeTaxes
Incometaxesarecomputedusingtheassetandliabilitymethod,underwhichdeferredtaxassetsandliabilitiesaredeterminedbasedonthedifference
betweenthefinancialstatementandtaxbasesofassetsandliabilitiesusingenactedtaxratesineffectfortheyearinwhichthedifferencesareexpectedtoaffect
taxableincome.Valuationallowancesareestablishedwhennecessarytoreducedeferredtaxassetstotheamountexpectedtoberealized.
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