Property and Equipment, net

Accounting Policy

We have significant capital invested in our long-lived assets, and judgments are made in determining their estimated useful lives and salvage values and if or when an asset (or asset group) has been impaired. The accuracy of these estimates affects the amount of depreciation and amortization expense recognized in our financial results and whether we have a gain or loss on the disposal of an asset. We assign lives to our assets based on our standard policy, which is established by management as representative of the useful life of each category of asset.

We review the carrying value of our long-lived assets whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. We typically estimate the fair value of assets starting with a “Replacement Cost New” approach and then deduct appropriate amounts for both functional and economic obsolescence to arrive at the fair value estimates. Other factors considered by management in performing this assessment may include current operating results, trends, prospects, and third-party appraisals, as well as the effect of demand, competition, and other economic, legal, and regulatory factors. In estimating expected future cash flows for determining whether an asset is impaired, assets are grouped at the lowest level of identifiable cash flows, which, for most of our assets, is the individual property. These analyses are sensitive to management assumptions and the estimates of the obsolescence factors. Changes in these assumptions and estimates could have a material impact on the analyses and the consolidated financial statements.

Additions to property and equipment are stated at cost. We capitalize the costs of improvements that extend the life of the asset. We expense maintenance and repair costs as incurred. Gains or losses on the dispositions of property and equipment are recognized in the period of disposal. Interest expense is capitalized on internally constructed assets at the applicable weighted-average borrowing rates of interest. Capitalization of interest ceases when the project is substantially complete or construction activity is suspended for more than a brief period of time. Interest capitalized was $45 million, $38 million, and $38 million for the years ended December 31, 2014, 2013, and 2012, respectively.

Depreciation is calculated using the straight-line method over the shorter of the estimated useful life of the asset or the related lease as follows:

Useful Lives

Land improvements	12 years
Buildings	20 to 40 years
Leasehold improvements	5 to 15 years
Riverboats and barges	30 years
Furniture, fixtures, and equipment	2 to 20 years

Balances

Property and Equipment, Net

	As of December 31,
(In millions)	2014			2013
Land and land improvements	$	6,218		$	6,267
Buildings, riverboats, and improvements	7,506			6,668
Furniture, fixtures, and equipment	2,685			2,298
Construction in progress	302			824
	16,711			16,057
Less: accumulated depreciation	(3,255		)	(2,819		)
Total property and equipment, net	$	13,456		$	13,238

Depreciation Expense

	Years Ended December 31,
(In millions)	2014		2013		2012
Depreciation expense	$	574	$	572	$	752

Depreciation expense is included in depreciation and amortization, corporate expense, and income from discontinued operations.

Tangible Asset Impairments

	Years Ended December 31,
(In millions)	2014		2013		2012
Continuing operations	$	60	$	2,381	$	181
Discontinued operations	78		195		450
Total	$	138	$	2,576	$	631

Continuing Operations

We recorded tangible asset impairment charges related to continuing operations totaling $60 million during 2014, which was primarily related to a property in Reno, Nevada. Due to a decline in recent performance and downward adjustments to expectations of future performance, we performed an impairment assessment for certain of our properties resulting in a charge of $49 million.

We recorded tangible asset impairment charges related to continuing operations totaling $2.4 billion during 2013. The pricing of certain casino property sales that occurred in the Atlantic City market indicated a substantial decline in market price had occurred for casinos in Atlantic City. We determined it was necessary to perform a fair value assessment of the properties, resulting in impairments of $1.7 billion. In addition, we determined that deteriorating gaming volumes in certain of our markets made it necessary to complete an assessment for impairment for certain of our properties, resulting in impairments of $105 million related to our land holdings in Biloxi, Mississippi, and a real estate project in Atlantic City, New Jersey; and $499 million primarily related to certain properties in Atlantic City.

Discontinued Operations

For information on impairments related to our discontinued operations, see Note 6, “Acquisitions, Dispositions, and Other Property Matters.”