Facebook’s Property and Equipment

By examining Facebook’s income statement and balance sheet, we can better understand the company’s fixed assets. We can observe the sequential growth in the historical cost of property and equipment line items. We can also take a closer look at the depreciation rate for property and equipment, in order to derive a net value for Facebook’s fixed assets. In a later article we will examine capital expenditure (capex) for new property and equipment.1

Before we analyze Facebook’s capex, it is instructive to assess the composition and value of Facebook’s currently held property and equipment. In Q1 2013, the combined historical costs of Facebook’s fixed assets were $3.53 billion, an increase of 47.7% over the year ago quarter.2 The largest component of Facebook’s property and equipment is network equipment. In the first quarter the historical cost of Facebook’s network equipment passed $2 billion.3

Facebook's quarterly property and equipment historical cost

Facebook’s filings also reveal the depreciation rate for its fixed assets. For its network equipment, Facebook estimates that the useful life of its purchases and leases will be three to four years. Buildings will fully depreciate after 15 to 20 years. Computer software and office equipment will last two to five years. Leased equipment and leasehold improvements depreciate at a rate lesser to the useful life or remaining lease term. Land and construction in progress does not depreciate.

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