Property and Equipment

12 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

Note 5 – Property and Equipment

The components of property and equipment were as follows:


(in millions)	Useful Lives	December 31, 2019		December 31, 2018

Buildings and equipment	Up to 40 years	$	2,587	$	2,428
Wireless communications systems	Up to 20 years	34,353		35,282
Leasehold improvements	Up to 12 years	1,345		1,299
Capitalized software	Up to 10 years	12,705		11,712
Leased wireless devices	Up to 18 months	1,139		1,159
Construction in progress		2,973		2,776
Accumulated depreciation and amortization		(33,118)		(31,297)

Property and equipment, net		$	21,984	$	23,359

We capitalize interest associated with the acquisition or construction of certain property and equipment and spectrum intangible assets. We recognized capitalized interest of $473 million, $362 million and $136 million for the years ended December 31, 2019, 2018 and 2017, respectively.

In December 2019, we sold 168 T-Mobile-owned wireless communications tower sites to an unrelated third party in exchange for net proceeds of $38 million which are included in Proceeds from sales of tower sites within Net cash used in investing activities in our Consolidated Statements of Cash Flows. A gain of $13 million was recognized as a reduction in Cost of services, exclusive of depreciation and amortization, in our Consolidated Statements of Comprehensive Income. We lease back space at certain of the sold tower sites for an initial term of ten years, followed by optional renewals.

Total depreciation expense relating to property and equipment was $6.0 billion, $6.4 billion and $5.8 billion for the years ended December 31, 2019, 2018 and 2017, respectively. Included in the total depreciation expense for the years ended December 31, 2019, 2018 and 2017 was $543 million, $940 million and $1.0 billion, respectively, related to leased wireless devices.

Asset retirement obligations are primarily for certain legal obligations to remediate leased property on which our network infrastructure and administrative assets are located.

Activity in our asset retirement obligations was as follows:


(in millions)	December 31, 2019		December 31, 2018

Asset retirement obligations, beginning of year	$	609	$	562
Liabilities incurred	35		26
Liabilities settled	(2)		(9)
Accretion expense	32		30
Changes in estimated cash flows	(15)		—

Asset retirement obligations, end of year	$	659	$	609

Classified on the balance sheet as:


Other long-term liabilities	$	659	$	609

The corresponding assets, net of accumulated depreciation, related to asset retirement obligations were $159 million and $194 million as of December 31, 2019 and 2018, respectively.