Property, Plant and Equipment

3 Months Ended

Jun. 30, 2019

Property, Plant and Equipment [Abstract]

Property, plant and equipment consists primarily of network equipment, leased devices 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 $1.1 billion and $987 million as of June 30, 2019 and 2018, respectively.

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



	June 30, 2019			March 31, 2019
	(in millions)
Land	$	107		$	246
Network equipment, site costs and related software	25,110			24,967
Buildings and improvements	392			856
Leased devices, non-network internal use software, office equipment and other	12,448			12,627
Construction in progress	2,919			3,044
Less: accumulated depreciation	(20,420		)	(20,539		)
Property, plant and equipment, net	$	20,556		$	21,201

Network equipment, site costs and related software includes switching equipment, cell site towers, site development costs, radio frequency equipment, network software, digital fiber optic cable, transport facilities and transmission-related equipment. Also included within this component are finance lease ROU assets, which primarily consist of prepayments of site rental costs for leases with an immaterial remaining lease obligation. Buildings and improvements principally consist of owned general office facilities, retail stores and leasehold improvements. Non-network internal use software, office equipment, leased devices and other primarily consists of furniture, information technology systems, equipment and vehicles, and leased devices. Construction in progress, which is not depreciated until placed in service, primarily includes materials, transmission and related equipment, labor, engineering, site development costs, interest and other costs relating to the construction and development of our network.

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 return the device, continue leasing the device, or purchase the device. As of June 30, 2019, substantially all of our device leases were classified as operating leases. Purchases of leased devices are reported 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:



	June 30, 2019			March 31, 2019
	(in millions)
Leased devices	$	10,770		$	10,972
Less: accumulated depreciation	(4,346		)	(4,360		)
Leased devices, net	$	6,424		$	6,612

During the three-month periods ended June 30, 2019 and 2018, we had non-cash transfers of returned leased devices from property, plant and equipment to device and accessory inventory at the lower of net book value or their estimated fair value of $236 million and $163 million, respectively. Non-cash accruals included in leased devices totaled $156 million and $221 million as of June 30, 2019 and 2018, respectively.

During the three-month periods ended June 30, 2019 and 2018, we recorded $225 million and $124 million, respectively, of loss on disposal of property, plant and equipment, net of recoveries. Net losses that resulted from the write-off of leased devices were primarily associated with lease cancellations prior to the scheduled customer lease terms where customers did not return the devices to us. Such losses are included in "Cost of equipment rentals" in our consolidated statements of comprehensive (loss) income.

On June 27, 2019, the Company entered into a sale and leaseback agreement for our Overland Park, Kansas campus. The sale closed and the leaseback began on July 9, 2019. As of June 30, 2019, the Company determined that the asset should be classified as held-for-sale and measured at the lower of its carrying amount or fair value less cost to sell resulting in the recognition of a non-cash impairment of approximately $207 million included in "Other, net" within the consolidated statements of comprehensive (loss) income.