Property and Equipment

Gaming and lottery machinery and equipment, including assets under capital leases, were as follows:



	As of December 31,
	2014			2013
Gaming equipment	799.9			439.2
Less: accumulated depreciation	(279.1		)	(145.0		)
Gaming equipment, net	520.8			294.2

Lottery machinery and equipment	$	311.7		$	350.3
Less: accumulated depreciation	(207.4		)	(210.6		)
Lottery machinery and equipment, net	104.3			139.7

Total gaming and lottery machinery and equipment, net	$	625.1		$	433.9

Property and equipment consisted of the following:



	As of December 31,
	2014			2013
Land	$	43.0		$	25.6
Buildings and leasehold improvements	206.3			181.6
Furniture and fixtures	36.2			30.1
Transportation equipment	5.0			6.4
Construction in progress	11.7			33.4
Other property and equipment, at cost	292.8			239.1
Less: accumulated depreciation	(207.3		)	(177.0		)
Property and equipment, net	$	387.7		$	339.2

Total property and equipment, net	$	1,012.8		$	773.1

The increase in property and equipment, net, was primarily related to recording the assets of Bally at fair value upon acquisition. See Note 3 (Acquisitions and Dispositions).

Depreciation expense for the years ended December 31, 2014, 2013 and 2012 was $269.6 million, $126.9 million and $122.6 million, respectively. Cost of equipment (and related start-up costs) associated with specific gaming and lottery contracts and internal use software projects are recorded as construction in progress and not depreciated until placed in service. When the equipment is placed into service, the related costs are transferred from construction in progress to lottery machinery and equipment, gaming equipment or other property and equipment, and we commence depreciation. Depreciation expense is excluded from cost of services, cost of product sales and other operating expenses and is separately included with amortization expense on the Consolidated Statements of Operations and Comprehensive Loss.

As described in Note 1 (Description of the Business and Summary of Significant Accounting Policies), we assess the recoverability of long-lived assets whenever events or changes in circumstances indicate that the carrying value of such an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset to the expected net future undiscounted cash flows to be generated by that asset. If it is determined that an impairment has occurred, the amount of the impairment recorded is equal to the excess of the asset's carrying value over its estimated fair value, which is generally derived from a discounted cash flow model.

As a result of our acquisition of Bally in December 2014, we determined that we would consolidate our gaming machine manufacturing to Las Vegas, Nevada and recorded a $9.4 million impairment on our Waukegan, Illinois manufacturing facility. We also assessed the remaining useful lives of personal property assets utilized in the Waukegan facility and began accelerating the depreciation of these assets through their planned cease use date in 2015. In addition, during 2014, 2013 and 2012, we recorded long-lived asset impairments of $4.2 million, $2.5 million and $5.8 million, respectively, related to underperforming U.S. lottery contracts. See Note 16 (Fair Value Measurements). In 2012, we recorded long-lived asset impairments of $20.8 million related to a write-down of certain undeployed gaming machines.

Upon our acquisition of Bally in November 2014, we began integrating Scientific Games and Bally and implementing our plans to streamline our product offerings, operations and cost structure. As a result of these plans we recorded $14.5 million of accelerated depreciation on certain gaming equipment assets. In December 2013, we initiated a reorganization plan to exit our instant lottery game operations in Mexico. We recorded $3.1 million of accelerated D&A in 2013 related to this reorganization plan. During 2012, we recorded $3.4 million related to the reorganization of our Australia printing operations.

As described in Note 1 (Description of the Business and Summary of Significant Accounting Policies), our policy is to periodically review the estimated useful lives of our fixed assets. As a result of our review during 2014, other that the personal property at the Waukegan manufacturing facility described above, no additional accelerated depreciation was recorded. Our reviews during 2013 and 2012 indicated lower estimated useful lives for our gaming machines deployed to our U.K. LBO customers relative to historical estimates due to market changes that we believe impacted the replacement cycle of these gaming machines. During 2013 and 2012, we recorded accelerated depreciation related to our change in estimated lives of $8.7 million and $6.6 million, respectively.

The impairment charges and accelerated depreciation expense discussed above are included in D&A in our Consolidated Statements of Operations and Comprehensive Loss for the respective years ended December 31, 2014, 2013, and 2012 and included in accumulated depreciation in our Consolidated Balance Sheets as of December 31, 2014 and 2013, respectively.