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 $428 million and $325 million as of December 31, 2017 and 2016, respectively.

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



	December 31, 2017			March 31, 2017
	(in millions)
Land	$	254		$	260
Network equipment, site costs and related software	22,649			21,693
Buildings and improvements	809			818
Non-network internal use software, office equipment, leased devices and other	10,626			8,625
Construction in progress	2,101			2,316
Less: accumulated depreciation	(16,727		)	(14,503		)
Property, plant and equipment, net	$	19,712		$	19,209

Sprint offers a leasing program to its customers 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 the device, continue leasing the device, or purchase the device. As of December 31, 2017, substantially all of our device leases were classified as operating leases. Lease revenue associated with devices subject to operating leases, which is included in equipment revenue, was $1.0 billion, $2.9 billion, $887 million and $2.5 billion for the three and nine-month periods ended December 31, 2017 and 2016, respectively.

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 and reports these purchases as cash outflows for "Capital expenditures - leased devices" in the consolidated statements of cash flows. 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:



	December 31, 2017			March 31, 2017
	(in millions)
Leased devices	$	9,098		$	7,276
Less: accumulated depreciation	(3,415		)	(3,114		)
Leased devices, net	$	5,683		$	4,162

During the nine-month periods ended December 31, 2017 and 2016, there were non-cash transfers to leased devices of approximately $3.7 billion and $2.3 billion, respectively, along with a corresponding decrease in "Device and accessory inventory" for devices leased through our direct channel. Non-cash accruals included in leased devices totaled $306 million and $166 million as of December 31, 2017 and 2016, respectively, for devices purchased from indirect dealers that were leased to our subscribers. Depreciation expense incurred on all leased devices was $990 million and $2.7 billion for the three and nine-month periods ended December 31, 2017, respectively, and $837 million and $2.2 billion for the same periods in 2016, respectively.

During the three and nine-month periods ended December 31, 2017 and 2016, we recorded $123 million, $527 million, $137 million and $368 million, respectively, of loss on disposal of property, plant and equipment, net of recoveries, which is included in "Other, net" within Operating income in our consolidated statements of comprehensive income (loss). Net losses that resulted from the write-off of leased devices are primarily associated with lease cancellations prior to the scheduled customer lease terms where customers did not return the devices to us were $123 million, $347 million, $109 million, and $340 million for the three and nine-month periods ended December 31, 2017 and 2016, respectively. In addition, during the nine-month period ended December 31, 2017, losses totaling $180 million were related to $181 million of cell site construction costs that are no longer recoverable as a result of changes in our network plans during the three-month period ended June 30, 2017 and $5 million of hurricane-related charges during the three-month period ended September 30, 2017, offset by a $6 million gain.