The Procter & Gamble Company (P&G) is focused on providing branded consumer packaged goods. The Company's products are sold in over 180 countries worldwide primarily through mass merchandisers, grocery stores, membership club stores, drug stores and in high-frequency stores, the neighborhood stores, which serve consumers in developing markets. (scottrade). We will be taking a look into, and answering questions pertaining the financial statements of Procter & Gamble. All figures will be in millions. The descriptions used by Procter & Gamble in its balance sheet to classify its property, plant, and equipment (PP&E) are; Buildings, Machinery and Equipment, and Land. Two out of the three descriptions of PP&E would be amortized, those being Buildings, and Machinery and Equipment. Land would not be amortized because most likely the economic value of land will increase, not decrease over time. (investopedia). The method of depreciation used by Procter & Gamble to depreciate its PP&E, as indicated in note 1 of the financial statements is the straight-line method. Depreciation expense is recognized over the assets’ estimated useful life. (note 1—Property, Plant and Equipment). The straight-line method is the most simplistic form of depreciation and therefore the most used. There are other forms of depreciation that may be used such as:
Activity method, which focuses on the units of production rather than the passage of time.
Decreasing-charge methods, which allow for lower depreciation costs as time goes on. This method is also known as the accelerated method.
Examples of such depreciation methods would be the double-declining-balance method and the sum-of-the-years’-digits method.
The estimated useful life the Procter & Gamble use to depreciate its Property, Plant, and Equipment are as follows: Machinery and equipment which include office furniture and