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Notes to Consolidated Financial Statements

Note 4. Property, Plant and Equipment and Intangible Assets

                       
   
Average Useful Life
   
2008
   
2007
   
2006
 
Property, plant and equipment, net
                       
Land and improvements
 
10–34 yrs.
 
$
868
 
$
864
       
Buildings and improvements
 
20–44
   
4,738
   
4,577
       
Machinery and equipment, including fleet and software
 
5–14
   
15,173
   
14,471
       
Construction in progress
       
1,773
   
1,984
       
         
22,552
   
21,896
       
Accumulated depreciation
       
(10,889
)
 
(10,668
)
     
       
$
11,663
 
$
11,228
       
Depreciation expense
     
$
1,422
 
$
1,304
 
$
1,182
 
Amortizable intangible assets, net
                       
Brands
 
5–40
 
$
1,411
 
$
1,476
       
Other identifiable intangibles
 
10–24
   
360
   
344
       
         
1,771
   
1,820
       
Accumulated amortization
       
(1,039
)
 
(1,024
)
     
       
$
732
 
$
796
       
Amortization expense
     
$
64
 
$
58
 
$
162
 

Property, plant and equipment is recorded at historical cost. Depreciation and amortization are recognized on a straight-line basis over an asset’s estimated useful life. Land is not depreciated and construction in progress is not depreciated until ready for service. Amortization of intangible assets for each of the next five years, based on average 2008 foreign exchange rates, is expected to be $64 million in 2009, $63 million in 2010, $62 million in 2011, $60 million in 2012 and $56 million in 2013.

Depreciable and amortizable assets are only evaluated for impairment upon a significant change in the operating or macroeconomic environment. In these circumstances, if an evaluation of the undiscounted cash flows indicates impairment, the asset is written down to its estimated fair value, which is based on discounted future cash flows. Useful lives are periodically evaluated to determine whether events or circumstances have occurred which indicate the need for revision. For additional unaudited information on our amortizable brand policies, see “Our Critical Accounting Policies” in Management’s Discussion and Analysis.

Nonamortizable Intangible Assets

Perpetual brands and goodwill are assessed for impairment at least annually. If the carrying amount of a perpetual brand exceeds its fair value, as determined by its discounted cash flows, an impairment loss is recognized in an amount equal to that excess. No impairment charges resulted from the required impairment evaluations. The change in the book value of nonamortizable intangible assets is as follows:

                                         
 
Balance, Beginning 2007
 
Acquisitions
 
Translation and Other
 
Balance, End of 2007
 
Acquisitions
 
Translation and Other
 
Balance, End of 2008
 
FLNA
                                         
Goodwill
$
284
 
$
 
$
27
 
$
311
 
$
 
$
(34
)
$
277
 
QFNA
                                         
Goodwill
 
175
   
   
   
175
   
   
   
175
 
LAF
                                         
Goodwill
 
144
   
   
3
   
147
   
338
   
(61
)
 
424
 
Brands
 
22
   
   
   
22
   
118
   
(13
)
 
127
 
   
166
   
   
3
   
169
   
456
   
(74
)
 
551
 
PAB
                                         
Goodwill
 
2,203
   
146
   
20
   
2,369
   
   
(14
)
 
2,355
 
Brands
 
59
   
   
   
59
   
   
   
59
 
   
2,262
   
146
   
20
   
2,428
   
   
(14
)
 
2,414
 
UKEU
                                         
Goodwill
 
1,412
   
122
   
92
   
1,626
   
45
   
(215
)
 
1,456
 
Brands
 
1,018
   
   
23
   
1,041
   
14
   
(211
)
 
844
 
   
2,430
   
122
   
115
   
2,667
   
59
   
(426
)
 
2,300
 
MEAA
                                         
Goodwill
 
376
   
114
   
51
   
541
   
1
   
(105
)
 
437
 
Brands
 
113
   
   
13
   
126
   
   
(28
)
 
98
 
   
489
   
114
   
64
   
667
   
1
   
(133
)
 
535
 
Total goodwill
 
4,594
   
382
   
193
   
5,169
   
384
   
(429
)
 
5,124
 
Total brands
 
1,212
   
   
36
   
1,248
   
132
   
(252
)
 
1,128
 
 
$
5,806
 
$
382
 
$
229
 
$
6,417
 
$
516
 
$
(681
)
$
6,252