Company: ISRG
Filing Date: 2025-01-31
Form Type: 10-K
Source: 0001035267-25-000017
Chunk: 147

Company: INTUITIVE SURGICAL INC
Filing Date: 2025-01-31
Form: 10-K
Item: Item 8
Chunk 147
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 securities within the fair value hierarchy.

95

InventoryInventory is stated at the lower of cost or net realizable value on a first-in, first-out basis. Inventory costs include direct materials, direct labor, and normal manufacturing overhead. The cost basis of the Company’s inventory is reduced for any products that are considered excessive or obsolete based upon assumptions about future demand and market conditions. Additionally, the cost basis of the Company’s inventory does not include any unallocated fixed overhead costs associated with abnormally low utilization of its factories.Property, Plant, and EquipmentProperty, plant, and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets, down to the estimated salvage value, if any. The salvage value of operating lease assets is estimated based on a number of factors including, but not limited to, the lease term, technological obsolescence, and the expected future demand for refurbished systems.Depreciation is recognized over the following estimated useful lives: Useful LivesBuildingUp to 30 yearsBuilding improvementsUp to 15 yearsLeasehold improvementsLesser of useful life or term of leaseEquipment and furniture5 years Operating lease assets1 to 7 yearsComputer and office equipment3 to 5 years Enterprise-wide software5 to 8 years Purchased softwareLesser of 3 years or life of licenseDepreciation expense for the years ended December 31, 2024, 2023, and 2022, was $439 million, $382 million, and $326 million, respectively.Capitalized Software Costs for Internal UseThe Company capitalizes direct costs associated with developing or obtaining internal use software, including enterprise-wide business software, which are incurred during the application development stage. These capitalized costs are recorded as capitalized software within property, plant, and equipment. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. Once the software is ready for its intended use, amounts capitalized are amortized over an estimated useful life of up to 8 years on a straight-line basis.Implementation Costs in a Cloud Computing Arrangement The Company capitalizes qualified implementation costs incurred in a hosting arrangement that is a service contract for which it is the customer in accordance with the requirements for capitalizing costs incurred to develop internal-use software. These capitalized implementation costs are recorded within intangible and other assets, net, and are generally amortized over the fixed, non-cancellable term of the associated hosting arrangement on a straight-line basis.During the