AMAZON COM INC | 2013 | FY | 3


PROPERTY AND EQUIPMENT
Property and equipment, at cost, consisted of the following (in millions):
 
 
December 31,
 
2013
 
2012
Gross property and equipment (1):
 
 
 
Land and buildings
$
4,584

 
$
2,966

Equipment and internal-use software (2)
9,274

 
6,228

Other corporate assets
231

 
174

Construction in progress
720

 
214

Gross property and equipment
14,809

 
9,582

Total accumulated depreciation (1)
3,860

 
2,522

Total property and equipment, net
$
10,949

 
$
7,060

 ___________________
(1)
Excludes the original cost and accumulated depreciation of fully-depreciated assets.
(2)
Includes internal-use software of $1.1 billion and $866 million as of December 31, 2013 and 2012.
In December 2012, we acquired our corporate headquarters for $1.2 billion consisting of land and 11 buildings that were previously accounted for as financing leases. The acquired building assets will be depreciated over their estimated useful lives of 40 years. We also acquired three city blocks of land for the expansion of our corporate headquarters for approximately $210 million.
Depreciation expense on property and equipment was $2.5 billion, $1.7 billion, and $1.0 billion, which includes amortization of property and equipment acquired under capital lease obligations of $826 million, $510 million, and $335 million for 2013, 2012, and 2011. Gross assets remaining under capital leases were $4.2 billion and $2.3 billion as of December 31, 2013 and 2012. Accumulated depreciation associated with capital leases was $1.9 billion and $1.1 billion as of December 31, 2013 and 2012. Cash paid for interest on capital leases was $41 million, $51 million, and $44 million for 2013, 2012, and 2011.
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 financing leases provide purchase options. Upon occupancy, the long-term construction obligations are considered long-term financing lease obligations with amounts payable during the next 12 months recorded as “Accrued expenses and other.” Gross assets remaining under financing leases were $578 million and $9 million as of December 31, 2013 and 2012. Accumulated depreciation associated with financing leases was $22 million and $5 million as of December 31, 2013 and 2012.

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