NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE B — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — (continued) Goodwill Cash and Cash Equivalents Inventories Property, Plant and Equipment Insurance Reserves Fair Value of Financial Instruments For purposes of the consolidated financial statements, EMCOR considers all highly liquid instruments with original maturities of three months or less to be cash equivalents. EMCOR maintains a centralized cash management program whereby its excess cash balances are invested in high quality, short-term money market instruments which are considered cash equivalents. At times, cash balances in EMCOR’s bank accounts may exceed federally insured limits. Inventories, which consist primarily of construction materials, are stated at the lower of cost or market. Cost is determined principally using the average cost method. Investments, Notes and Other Long-Term Receivables Investments, notes and other long-term receivables at December 31, 2001 were $16.8 million compared to $10.4 million at December 31, 2000, and primarily consist of investments in joint ventures accounted for using the equity method of accounting. Property, plant and equipment is stated at cost. Depreciation is recorded principally using the straight-line method over estimated useful lives ranging from 3 to 40 years. As events and circumstances indicate, EMCOR reviews the carrying amount of property, plant and equipment for impairment. In performing the review for recoverability, long-lived assets are assessed for possible impairment by comparing their carrying values to their undiscounted net pre-tax cash flows expected to result from the use of the asset. Impaired assets are written down to their fair values, generally their discounted cash flows. Through December 31, 2001, no adjustment for the impairment of Property, plant and equipment carrying value has been required. Property, plant and equipment in the accompanying Consolidated Balance Sheets consisted of the following amounts as of December 31, 2001 and 2000 (in thousands): EMCOR’s financial instruments include accounts receivable, investments, notes and other long-term receivables, long- term debt and other financing commitments, for which carrying values approximate their fair values. During the second quarter of 2001, EMCOR called its  $115.0 million 5.75% Convertible Subordinated Notes for redemption. All of the Convertible Subordinated Notes were converted, net of related deferred financing costs, into approximately 4.2 million shares of EMCOR common stock. EMCOR’s insurance liability is determined actuarially, based on claims filed and an estimate of claims incurred but not yet reported. At December 31, 2001 and 2000, the estimated current portion of the discounted insurance liability was included in “Other accrued expenses and liabilities” in the accompanying Consolidated Balance Sheets. The non-current portion of the discounted insurance liability was included in “Other long-term obligations,” and  at December 31, 2001 and 2000 was $66.0 million and $53.7 million, respectively. Goodwill at December 31, 2001 and 2000, was approximately $56.0 million and $67.6 million, respectively, and reflects the excess of cost over fair market value of net identifiable assets of companies acquired in purchase transactions. Goodwill is being amortized using the straight- line method over periods ranging from 5 to 20 years. At the end of each quarter, EMCOR reviews events and changes in circumstances to determine whether the recoverability of the carrying value of goodwill should be reassessed. Should events or circumstances indicate that the carrying value may not be recoverable based on undiscounted future cash flows, an impairment loss measured by the difference between the discounted future cash flows (or another acceptable method for determining fair value) and the carrying value of goodwill would be recognized by EMCOR. Through December 31, 2001, no adjustment for the impairment of goodwill carrying value has been required. In July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 142, “Goodwill and Other Intangible Assets.” For a further discussion of this new standard, please refer to the subheading “New Accounting Pronouncements” under this Note B. 2001 2000 Machinery and equipment $ 54,225 $ 45,042 Furniture and fixtures 22,858 16,905 Land, buildings and  leasehold improvements 28,016 24,740 105,099 86,687 Accumulated depreciation  and amortization (62,551) (47,728) $ 42,548 $ 38,959