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ances, credit quality of the Company's customers, current Company does not amortize goodwill and economic conditions and other factors that may affect the ble assets

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ances, credit quality of the Company's customers, current Company does not amortize goodwill and economic conditions and other factors that may affect the ble assets with indefinite useful lives; rather, such as customers' abilities to pay. required to be tested for impairment at least annu sooner if events or changes in circumstances indica Inventories the assets may be impaired. The Company perform Inventories are stated at the lower of cost, computed using goodwill and intangible asset impairment tests in the the first-in, first-out method, and net realizable value. Any quarter of each year. The Company did not recognize adjustments to reduce the cost of inventories to their net real- impairment charges related to goodwill or indefinite izable value are recognized in earnings in the current period. intangible assets during 2017, 2016 and 2015. For purp of testing goodwill for impairment, the Company es Property, Plant and Equipment lished reporting units based on its current reporting st Property, plant and equipment are stated at cost. ture. Goodwill has been allocated to these reporting unit Depreciation is computed by use of the straight-line method the extent it relates to each reporting unit. In 2017 over the estimated useful lives of the assets, which for 2016, the Company's goodwill was primarily allocated buildings is the lesser of 30 years or the remaining life of the Americas and Europe reporting units. the underlying building; between one and five years for ma- The Company amortizes its intangible assets with def chinery and equipment, including product tooling and man- nite useful lives over their estimated useful lives and ufacturing process equipment; and the shorter of lease term views these assets for impairment. The Company typical or useful life for leasehold improvements. The Company amortizes its acquired intangible assets with definite usef capitalizes eligible costs to acquire or develop internal-use lives over periods from three to seven years. software that are incurred subsequent to the preliminary Acquired Intangible Assets project stage. Capitalized costs related to internal-use soft- ware are amortized using the straight-line method over the The Company's acquired intangible assets with definite estimated useful lives of the assets, which range from three useful lives primarily consist of patents and licenses. The to five years. Depreciation and amortization expense on following table summarizes the components of acquired property and equipment was $8.2 billion, $8.3 billion and intangible asset balances as of September 30, 2017. $9.2 billion during 2017, 2016 and 2015, respectively. Amortization expense related to acquired intangible assets was $1.2 billion in 2017. Property, Plant and Equipment, Net Gross Net ($ millions) 2017 2016 Carrying Accumulated Carrying Land and buildings $ 13,587 $ 10,185 $ millions Amount Amortization Amount Machinery, equipment and internal-use software 54,210 44,543 Definite-lived and amortizable Leasehold improvements 7.279 6,517 acquired intangible assets $ 7,507 $ (5,309) $ 2,198 Gross property, plant and equipment 75,076 61,245 Indefinite-lived and non-amortizable acquired intangible assets 100 100 Accumulated depreciation and amortization (41,293) (34,235) Total acquired intangible assets $ 7,607 $ (5,309) $ 2,298 Total property, plant and equipment, net $ 33,783 $ 27,010 Fair Value Measurements Long-Lived Assets Including Goodwill and Other Acquired Intangible Assets The Company applies fair value accounting for all finan- cial assets and liabilities and non-financial assets and li- The Company reviews property, plant and equipment, in- abilities that are recognized or disclosed at fair value in ventory component prepayments and identifiable intangi- the financial statements on a recurring basis. The bles, excluding goodwill and intangible assets with Company defines fair value as the price that would be re- indefinite useful lives, for impairment. Long-lived assets ceived from selling an asset or paid to transfer a liability are reviewed for impairment whenever events or changes in in an orderly transaction between market participants at circumstances indicate the carrying amount of an asset may the measurement date. When determining the fair value not be recoverable. Recoverability of these assets is mea- measurements for assets and liabilities that are required sured by comparison of their carrying amounts to future to be recorded at fair value, the Company considers the undiscounted cash flows the assets are expected to gener- principal or most advantageous market in which the ate. If property, plant and equipment, inventory component Company would transact and the market-based risk mea- prepayments and certain identifiable intangibles are consid surements or assumptions that market participants would ered to be impaired, the impairment to be recognized equals use to price the asset or liability, such as risks inherent in e amount by which the value of the valuation techniques strictions and credit rick

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