NOTE 7. PROPERTY AND EQUIPMENT, NET

Property and equipment are stated at cost, net of accumulated depreciation and amortization. The costs of additions and improvements are capitalized, while maintenance and repairs are charged to expense as incurred. When an item is sold or retired, the cost and related accumulated depreciation is relieved, and the resulting gain or loss, if any, is recognized in the consolidated statements of income. We evaluate our property and equipment for impairment periodically or as changes in circumstances or the occurrence of events suggest the remaining value is not recoverable from future cash flows. If the carrying value of our property and equipment is impaired, an impairment charge is recorded for the amount by which the carrying value of the property and equipment exceeds its fair value. We provide for depreciation and amortization primarily using the straight-line method by charges to income in amounts that allocate the cost of property and equipment over their estimated useful lives as follows:


Asset Classification		Estimated Useful Life

Land improvements		15 to 20 years
Buildings and improvements		10 to 40 years
Leasehold improvements		Shorter of remaining lease term or useful life of improvements
Machinery and equipment		3 to 8 years
Office furniture and equipment		3 to 7 years
Computer hardware and software		3 to 7 years

We capitalize interest on the acquisition and construction of significant assets that require a substantial period of time to be made ready for use. The capitalized interest is included in the cost of the completed asset and depreciated over the asset’s estimated useful life. The amount of interest capitalized during the years ended December 31, 2017 and 2016, was not material.

We capitalize certain costs incurred in connection with developing or obtaining software designated for internal use based on three distinct stages of development. Qualifying costs incurred during the application development stage, which consist primarily of internal payroll and direct fringe benefits and external direct project costs, including labor and travel, are capitalized and amortized on a straight-line basis over the estimated useful life of the asset. Costs incurred during the preliminary project and post-implementation and operation phases are expensed as incurred. These costs are general and administrative in nature and relate primarily to the determination of performance requirements, data conversion and training. Software developed to deliver hosted services to our customers has been designated as internal use.

Property and equipment, net, consisted of the following (in thousands):


	December 31,		December 31,
		2017		2016

Land and improvements	$	7,323	$	7,255
Buildings and improvements		180,185		171,455
Leasehold improvements		52,227		44,568
Machinery and equipment		284,375		262,718
Office furniture and equipment		47,476		42,124
Computer hardware and software		206,580		189,327
Construction in progress		33,470		25,145
		811,636		742,592
Less accumulated depreciation and amortization		432,540		385,170
Total property and equipment, net	$	379,096	$	357,422

Below are the amounts of depreciation and amortization of property and equipment, capitalized computer software for internal use and unpaid property and equipment reflected in account payable and accrued expenses:


	December 31,		December 31,		December 31,
		2017		2016		2015

Depreciation and amortization expense	$	73,797	$	63,537	$	57,029
Capitalized computer software developed for internal use		16,131		15,590		19,081
Unpaid property and equipment, reflected in accounts payable and accrued liabilities		11,744		10,601		8,534

We recorded an $8.2 million impairment charge related to internally-developed software not yet placed into service within Unallocated Amounts operating expenses during the year ended December 31, 2015 as a result of a strategic shift to refocus our development efforts within our information management business.