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 the consolidated statements of 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, 2018 and 2017, 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, 2018		December 31, 2017

Land and improvements	$	8,701	$	7,323
Buildings and improvements	190,809		180,185
Leasehold improvements	66,917		52,227
Machinery and equipment	299,204		284,375
Office furniture and equipment	51,661		47,476
Computer hardware and software	218,150		206,580
Construction in progress	70,561		33,470
	906,003		811,636
Less accumulated depreciation and amortization	468,733		432,540
Total property and equipment, net	$	437,270	$	379,096

Below are the amounts of depreciation and amortization of property and equipment, capitalized computer software for internal use, unpaid property and equipment reflected in account payable and accrued expenses, and rental and reagent rental program instruments transferred from inventory to property and equipment:



	December 31, 2018		December 31, 2017		December 31, 2016

Depreciation and amortization expense	$	74,208	$	73,797	$	63,537
Capitalized computer software developed for internal use	$	17,115	$	16,131	$	15,590
Unpaid property and equipment, reflected in accounts payable and accrued liabilities	$	17,894	$	11,744	$	10,601
Rental and Reagent Rental Program instruments transferred from inventory to property and equipment (Note 3)	$	20,360	$	16,313	$	18,324

During the third quarter of 2018, we decided to discontinue the development of our in–clinic SNAP Fecal product and focus resources and capital on supporting fecal antigen testing within our reference laboratories, which resulted in a $2.6 million impairment of construction in progress production equipment related to SNAP Fecal. This impairment charge is recorded as general and administrative expense in our CAG reporting segment.