Property and Equipment

12 Months Ended

Dec. 31, 2016

Property, Plant and Equipment [Abstract]

Property and Equipment

PROPERTY AND EQUIPMENT

Property and equipment, at cost, consisted of the following (in millions):

	December 31,
	2015		2016
Gross property and equipment (1):
Land and buildings	$	9,770	$	13,998
Equipment and internal-use software (2)	18,417		25,989
Other corporate assets	334		649
Construction in progress	1,532		1,805
Gross property and equipment	30,053		42,441
Total accumulated depreciation (1)	8,215		13,327
Total property and equipment, net	$	21,838	$	29,114

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(1) Excludes the original cost and accumulated depreciation of fully-depreciated assets.

(2) Includes internal-use software of $1.4 billion as of December 31, 2015 and 2016.

Depreciation expense on property and equipment was $3.6 billion, $4.9 billion, and $6.4 billion which includes amortization of property and equipment acquired under capital leases of $1.5 billion, $2.7 billion, and $3.8 billion for 2014, 2015, and 2016. Gross assets recorded under capital leases were $12.0 billion and $17.0 billion as of December 31, 2015 and 2016. Accumulated depreciation associated with capital leases was $5.4 billion and $8.5 billion as of December 31, 2015 and 2016.

We capitalize construction in progress and record a corresponding long-term liability for build-to-suit lease agreements where we are considered the owner, for accounting purposes, during the construction period. For buildings under build-to-suit lease arrangements where we have taken occupancy, which do not qualify for sales recognition under the sale-leaseback accounting guidance, we determined that we continue to be the deemed owner of these buildings. This is principally due to our significant investment in tenant improvements. As a result, the buildings are being depreciated over the shorter of their useful lives or the related leases’ terms. Additionally, certain build-to-suit lease arrangements and finance leases provide purchase options. Upon occupancy, the long-term construction obligations are considered long-term finance lease obligations with amounts payable during the next 12 months recorded as “Accrued expenses and other.” Gross assets remaining under finance leases were $2.0 billion and $2.9 billion as of December 31, 2015 and 2016. Accumulated depreciation associated with finance leases was $199 million and $361 million as of December 31, 2015 and 2016.