Page 121 - Martin Marietta - 2024 Proxy Statement

NOTES TO FINANCIAL STATEMENTS (Continued)
Property, Plant and Equipment. Property, plant and equipment are stated at cost.

The estimated service lives for property, plant and equipment are as follows:
Class of Assets Range of Service Lives
Buildings 5 to 30 years
Machinery & Equipment 2 to 20 years
Land Improvements 5 to 60 years
The Company begins capitalizing quarry development costs at a point when reserves are determined to be proven or probable,
economically mineable and when demand supports investment in the market. Capitalization of these costs ceases when production
commences. Capitalized quarry development costs are classified as land improvements and depreciated over the life of the
reserves.
The Company reviews relevant facts and circumstances to determine whether to capitalize or expense pre‐production stripping
costs when additional pits are developed at an existing quarry. If the additional pit operates in a separate and distinct area of the
quarry, these costs are capitalized as quarry development costs and depreciated over the life of the uncovered reserves.
Additionally, a separate asset retirement obligation is created for additional pits when the liability is incurred. Once a pit enters
the production phase, all post‐production stripping costs are charged to inventory production costs as incurred.

Mineral reserves and mineral interests acquired in connection with a business combination are valued using an income approach
for the estimated life of the reserves. The Company’s aggregates reserves average approximately75 years based on the 2023
annual production level.
Depreciation is computed based on estimated service lives using the straight‐line method. Depletion of mineral reserves is
calculated based on proven and probable reserves using the units‐of‐production method on a quarry‐by‐quarry basis.

Property, plant and equipment are reviewed for impairment wheneverfacts and circumstances indicate that the carrying amount
of an asset group may not be recoverable. An impairment loss is recognized if expected future undiscounted cash flows over the
estimated remaining service life of the related asset group are less than the asset group’s carrying value.
Repair and Maintenance Costs. Repair and maintenance costs that do not substantially extend the life of the Company’s plant and
equipment are expensed as incurred.
Leases. Pursuant to Accounting Standards Codification 842, Leases (ASC 842), if the Company determines a contract is or contains
a lease at the inception of an agreement, the Company records a right‐of‐use (ROU) asset, which represents the Company’s right
to use an underlying leased asset, and a lease liability, which represents the Company’s obligation to make lease payments. The
ROU asset and lease liability are recorded on the consolidated balance sheets at the present value of the future lease payments
over the lease term at commencement date. The Company determines the present value of lease payments based on the implicit
interest rate, which may be explicitly stated in the lease, if available, or may be the Company’s estimated collateralized incremental
borrowing rate based on the term of the lease. Initial ROU assets also include any lease payments made at or before
commencement date and any initial direct costs incurred and are reduced by lease incentives. Certain of the Company’s leases
contain renewal and/or termination options. The Company recognizes renewal or termination options as part of its ROU assets
and lease liabilities when the Company has the unilateral right to renew or terminate and it is reasonably certain these options will
be exercised.
Some leases require the Company to pay non‐lease components, which may include taxes, maintenance, insurance and certain
other expenses applicable to the leased property, and are primarily variable costs. The Company accounts for lease and non‐lease
components as a single amount, with the exception of railcar, fleet vehicle and pipeline leases, for which the Company separately
accounts for the lease and non‐lease components.
Leases are evaluated and determined to be eitherfinance leases or operating leases. The lease is a finance lease if it transfers
ownership to the underlying asset by the end of the lease term; includes a purchase option that is reasonably certain to be
exercised; has a lease termfor the major part of the remaining economic life of the underlying asset; has a present value of the
sum of the lease payments (including renewal options) that equals or exceeds substantially all of the fair value of the underlying
asset; or is for an underlying asset that is of a specialized nature and is expected to have no alternative use to the lessor at the end
of the lease term. If none of these terms exist, the lease is an operating lease.

23 Annual Report ♦ Page 19