Financial Information
12. PROPERTY AND EQUIPMENT
The following table presents the composition of our property and equipment balances at year-end 2014 and 2013:
We record property and equipment at cost, including interest and real estate taxes we incur during development and construction. Interest we capitalized as a cost of property and equipment totaled $33 million in 2014, $31 million in 2013, and $27 million in 2012. We capitalize the cost of improvements that extend the useful life of property and equipment when we incur them. These capitalized costs may include structural costs, equipment, fixtures, floor, and wall coverings. We expense all repair and maintenance costs when we incur them. We compute depreciation using the straight-line method over the estimated useful lives of the assets (three to 40 years), and we amortize leasehold improvements over the shorter of the asset life or lease term. Our gross depreciation expense totaled $135 million in 2014, $107 million in 2013, and $93 million in 2012 (of which $51 million in 2014, $48 million in 2013, and $45 million in 2012 we included in reimbursed costs). Fixed assets attributed to operations located outside the United States were $291 million in 2014 and $238 million in 2013.
See Footnote No. 3, “Acquisitions and Dispositions” for information on a $25 million impairment charge we recorded in 2014 on three EDITION hotels in the “Depreciation, amortization, and other” caption of our Income Statements.