Property, Plant and Equipment

3 Months Ended

Jun. 30, 2016

Property, Plant and Equipment [Abstract]


Note 5.	Property, Plant and Equipment

Property, plant and equipment consists primarily of network equipment and other long-lived assets used to provide service to our subscribers. Non-cash accruals included in property, plant and equipment (excluding leased devices) totaled $309 million and $1.2 billion as of June 30, 2016 and 2015, respectively.

The following table presents the components of property, plant and equipment and the related accumulated depreciation:



	June 30, 2016			March 31, 2016
	(in millions)
Land	$	260		$	260
Network equipment, site costs and related software	21,493			21,500
Buildings and improvements	794			798
Non-network internal use software, office equipment, leased devices and other	6,858			6,182
Construction in progress	1,220			1,249
Less: accumulated depreciation	(10,910		)	(9,692		)
Property, plant and equipment, net	$	19,715		$	20,297

In September 2014, Sprint introduced a leasing program, whereby qualified subscribers can lease a device for a contractual period of time. At the end of the lease term, the subscriber has the option to turn in their device, continue leasing their device, or purchase the device. As of June 30, 2016, substantially all of our device leases were classified as operating leases. At lease inception, the devices leased through Sprint's direct channels are reclassified from inventory to property, plant and equipment. For those devices leased through indirect channels, Sprint purchases the device to be leased from the retailer at lease inception. The devices are then depreciated using the straight-line method to their estimated residual value generally over the term of the lease.

The following table presents leased devices and the related accumulated depreciation:



	June 30, 2016			March 31, 2016
	(in millions)
Leased devices	$	5,576		$	4,913
Less: accumulated depreciation	(1,810		)	(1,267		)
Leased devices, net	$	3,766		$	3,646

During the three-month periods ended June 30, 2016 and 2015, there were non-cash transfers to leased devices of approximately $541 million and $808 million, respectively, along with a corresponding decrease in "Device and accessory inventory." Non-cash accruals included in leased devices totaled approximately $142 million and $207 million as of June 30, 2016 and 2015, respectively, for devices purchased from indirect dealers that were leased to our subscribers. Depreciation expense incurred on all leased devices for the three-month periods ended June 30, 2016 and 2015 was $644 million and $276 million, respectively.

During the three-month period ended June 30, 2016, we recorded $120 million of loss on disposal of property, plant and equipment, which is included in "Other, net" in our consolidated statements of comprehensive loss. These losses resulted from the write-off of leased devices associated with lease cancellations prior to the scheduled customer lease terms where customers did not return the devices to us. If customers continue to not return devices, we may continue to have similar losses in future periods.