Page 128 - Martin Marietta - 2025 Proxy Statement

NOTES TO FINANCIAL STATEMENTS (Continued)
Mineral reservesand mineral interests acquired in connection with abusinesscombination are valuedusing an income approach
forthe estimatedlifeof the reserves.
Depreciation is computed basedonestimated servicelives usingthe straight-line method. Depletionofmineral reserves is
calculatedbased on proven andprobable reservesusing theunits-of-production method on aquarry-by-quarry basis. Forthe years
ended December31, 2024, 2023, and 2022, depletionexpense was$78 million, $53 million, and$60 million, respectively.

Property, plantand equipmentare reviewed for impairment whenever facts andcircumstances indicate that thecarrying amount
of anassetgroup may not be recoverable. An impairment loss is recognized if expected future undiscounted cash flowsoverthe
estimated remaining service lifeof the relatedassetgroup arelessthanthe assetgroup’scarrying value.
Repair and Maintenance Costs. Repair and maintenance coststhat donot substantially extend thelifeof the Company’splant and
equipmentare expensed as incurred.

Leases. Pursuant to Accounting Standards Codification842, Leases (ASC 842), if the Company determinesa contract is or contains
a leaseatthe inceptionof anagreement,the Companyrecords a right-of-use (ROU) asset, which representsthe Company’s right
touse an underlying leased asset, anda leaseliability, which representsthe Company’sobligationto makelease payments. The
ROU assetand leaseliabilityare recorded on theconsolidated balancesheetsatthe presentvalue of the futurelease payments
overthe leasetermatcommencement date. The Company determines the present valueoflease payments basedonthe implicit
interest rate, which may be explicitly stated in thelease, if available, or may bethe Company’sestimated collateralized incremental
borrowing rate basedonthe term of thelease. Initial ROUassets also include any lease payments made at or before
commencement dateand anyinitial direct costs incurredand are reduced by lease incentives.Certainof the Company’sleases
containrenewal and/or terminationoptions. The Companyrecognizes renewal or terminationoptions as part of its ROU assets
and leaseliabilities whenthe Company has theunilateral right to reneworterminate and it is reasonably certain theseoptions will
be exercised.
Some leases require the Company to pay non-lease components, which mayinclude taxes, maintenance, insuranceand certain
other expenses applicable to theleasedpropertyand, are primarily, variable costs. The Company accounts for leaseand non-lease
components as asingleamount,except railcar, fleet vehicleand pipelineleases, for which the Company separately accounts for
the leaseand non-leasecomponents.
Leases areevaluated anddeterminedtobeeither finance leases or operatingleases. Thelease is a finance lease if ittransfers
ownership to theunderlying asset by the endof the leaseterm; includes a purchaseoptionthat is reasonably certain to be
exercised;has alease termforthe majorpartof the underlying asset's remaining economic life; hasa present value of thesum of
thelease payments (including renewaloptions)thatequalsorexceedssubstantially allof the fairvalueof the underlying asset; or
is for an underlying assetthat isof a specializednatureand is expected to have no alternativeuse to thelessoratthe endof the
lease term. If noneof these termsexist,the lease isanoperating lease.
Leases withan initial leasetermof one year or less arenot recorded on theconsolidated balancesheets.Costs for theseleasesare
expensedas incurred.

In theconsolidated statements of earnings,operating leaseexpense,which is recognized on astraight-linebasis over thelease
o
term, andthe amortization offinancelease ROUassets are included inthe Totalcostofrevenues or Selling, generaland
administrativeexpenses line items in theconsolidated statements of earnings.Accretiononthe liabilities forfinanceleases is
included in interestexpense.

Goodwill and Other Intangible Assets. Goodwill represents theexcesspurchase price paid foracquiredbusinessesoverthe
estimated fair valueofidentifiableassetsand liabilities. Other intangibleassets representamountsassigned principally to
contractualagreements andare either amortized ratably over theusefullives to the Company or notamortized if deemed to have
an indefinite useful life. The Company intends, and believes ithas theability, to renew royalty agreements andextendpermits that
support thevalue of certain intangibleassets.

age20 ♦ 2024 Annual Report