Property and Equipment, net

12 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

Property and equipment are stated at cost, and when placed into service, are depreciated using the straight-line method over the estimated useful lives of the assets as follows:



Item		Estimated Life in Years
Lottery and other machinery and equipment		3 - 15
Gaming equipment		1 - 5
Transportation equipment		3 - 8
Furniture and fixtures		5 - 10
Buildings and improvements		15 - 40

Costs incurred for equipment associated with specific Gaming, Lottery and Digital contracts not yet placed into service are classified as construction in progress and are not depreciated until placed into service. Leasehold improvements are amortized over the lesser of the term of the corresponding lease or their useful life.

We periodically review the estimated useful lives of our fixed assets and assess the recoverability of long-lived assets (or asset groups) whenever events or changes in circumstances indicate that the carrying value of such an asset (or asset groups) may not be recoverable.

Property and equipment, net consisted of the following:



	As of December 31,
	2019			2018
Land	$	15		$	15
Buildings and leasehold improvements	129			128
Gaming and lottery machinery and equipment	1,028			1,041
Furniture and fixtures	31			27
Construction in progress	30			17
Other property and equipment	263			240
Less: accumulated depreciation	(996		)	(921		)
Total property and equipment, net	$	500		$	547

Depreciation expense is excluded from cost of services, cost of product sales, cost of instant products and other operating expenses and is separately presented within D&A.



	Year Ended December 31,
	2019⁽¹⁾		2018⁽²⁾		2017
Depreciation expense	$	217	$	232	$	270
(1) Includes assets held for sale impairment charges of $9 million. (2) Includes assets held for sale impairment charges of $19 million.

Capitalized installation costs

Certain Participation contracts require us to perform installation activities. Direct installation activities, which include costs for installing gaming machines, terminals, facilities wiring, computers, internal labor and travel, are performed at the inception of the contract to enable us to perform under the terms of the contract. Such activities do not represent a separate earnings process and, therefore, the installation costs are capitalized and amortized over the estimated contract term in the case of lottery-related contracts and typically over the life of the equipment when no long-term contract exists, as is often the case within our Participation gaming business. We had $20 million and $28 million of capitalized installation costs, net of accumulated depreciation, included within lottery machinery and equipment included within property and equipment, net as of December 31, 2019 and 2018, respectively. There were no capitalized installation costs recorded related to gaming activities as of December 31, 2019 and 2018.

Assets Held For Sale

We had $25 million and $36 million in assets held for sale as of December 31, 2019 and 2018, respectively. Assets held for sale relate to our Gaming business segment and consist of certain properties in Chicago that were marketed for sale as a result of facility rationalization and integration activities. These assets are included within Prepaid expenses, deposits and other current assets and are reported at the lower of the carrying value or fair market value, less expected costs to sell. We measured the fair value of assets held for sale under a market approach and have categorized such measurements as Level 3 in the fair value hierarchy, which resulted in the impairment charges noted above.