Notes to Consolidated Financial Statements Revenue Recognition Inventories are stated at the lower of cost (first-in, first-out Inventories Cash Equivalents Accounts Receivable Securitization Property, Plant and Equipment The Company accounts for the securitization of accounts receivable in accordance with SFAS No. 140 , “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” When the Company sells accounts receivable in securitizations, a subordinated retained interest in the securitized portfolio is retained by the Company. Gain or loss on sale of the accounts receivable depends in part on the previous carrying amount of the financial assets involved in the transfer, allocated between the assets sold and the retained interests based on their relative fair value at the date of transfer. Because quoted market prices are generally not available to determine the Company’s fair value of the retained interest, the Company estimates the fair value of the retained interest by estimating future expected credit losses to determine the future expected cash flows, which generally approximate fair value given the securitized portfolio’s short-term weighted average life. At the time the receivables are sold, the balances are removed from the Consolidated Balance Sheets. Costs associated with the sale of receivables, primarily related to the discount and loss on sale, are included in Other Expense, net. Reserves for excess and obsolete inventory were approximately $ 9 million and $ 8 million at December  31 , 2001 and  2000 , respectively. During the years ended December  31 , 2001 , 2000 and  1999 , the Company allocated $ 3 million, $ 5 million and  $ 4 million, respectively, of general and administrative costs to inventory. General and administrative costs included in both the December  31 , 2001 and  2000 inventory balances were $ 1 million. December 31,  (in millions) 2001 2000 Raw materials $ 22 $ 19 Work in process 24 19 Finished products 41 49 $ 87 $ 87 method) or market value. Market value for raw materials is based on replacement costs, and for other inventory classifications is based on net realizable value. The Company considers highly liquid investments with maturities of three months or less from the date of purchase to be cash equivalents. These investments are valued at cost, which approximates fair value. Property, plant and equipment are recorded at cost. Depreciation and amortization are principally calculated for financial reporting purposes on the straight-line method over the estimated useful lives of the related assets, which range from  20 to  50 years for buildings and improvements and from three to  15 years for machinery and equipment. Leasehold improvements are amortized over the life of the related facility leases or the asset, whichever is shorter. Straight-line and accelerated methods of depreciation are used for income tax purposes. December 31,  (in millions) 2001 2000 Land $ 24 $ 24 Buildings and  leasehold improvements 66 61 Machinery and equipment 180 188 Equipment with customers 46 35 Construction in progress 6 19 322 327 Accumulated depreciation  and amortization ( 144 ) ( 144 ) $ 178 $ 183 Notes to Consolidated Financial Statements Depreciation expense was $ 27 million, $ 34 million and  $ 37 million for the years ended December  31 , 2001, 2000 and 1999 , respectively. Repairs and maintenance expense was  $ 11 million, $ 10 million and $ 8 million for the years ended December  31 , 2001 , 2000 and  1999 , respectively. For the purpose of identifying and measuring impairment, assets are grouped at the lowest level for which there is identifiable cash flows that are largely independent of the cash flows generated by other asset groups. Based upon management’s assessment of the future undiscounted operating cash flows of acquired businesses, the carrying values of goodwill and other intangible assets at December  31 , 2001 have not been impaired. Goodwill represents the excess of cost over the fair value of net assets acquired and is amortized on a straight-line basis over estimated useful lives ranging from  15 to  40 years (see “New Accounting and Disclosure Standards Issued”). Other intangible assets include purchased patents, trademarks and other identified rights and are amortized on a straight-line basis over their legal or estimated useful lives, whichever is shorter (generally not exceeding  20 years). The Company recognizes revenue from product sales when title transfers, and for services as performed. For product sales into the Company’s Japan joint venture (see Note  1 ), the Company recognizes revenue when title transfers from the joint venture to the end customer. For certain products, the Company maintains consigned inventory at customer locations. For these products, revenue is recognized at the time the Company is notified that the customer has used the inventory. The Company reduces revenue with reserves for estimated price concessions and sales returns, and allowances are provided at the time revenue is recognized in accordance with SFAS No. 48 , “Revenue Recognition When Right of Return Exists.” Investments in unconsolidated affiliates are accounted for under the cost method and have been designated as available- for-sale in accordance with the provisions of SFAS No. 115 , “Accounting for Certain Investments in Debt and Equity Securities.” These investments are carried at fair market value, with unrealized gains and losses reported in stockholders’ equity as Accumulated Other Comprehensive Income. Gains or losses on investments sold are based on the specific identification method. The fair values of certain investments are based on quoted market prices. For other investments, various methods are used to estimate fair value, including external valuations and discounted cash flows. The Company accounts for income taxes in accordance with SFAS No. 109 , “Accounting for Income Taxes.” Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Edwards Lifesciences’ operations were included in Baxter’s consolidated United States federal and state income tax returns and in the tax returns of certain Baxter foreign subsidiaries prior to the Distribution. The provision for income taxes prior to the Distribution has been determined as if Edwards Lifesciences had filed separate tax returns under its existing structure for the periods presented. Prior to the Distribution, all income taxes were settled with  Baxter on a current basis through the Investment by Baxter International Inc., net account. Management reviews the carrying amounts of goodwill and other intangibles whenever events and circumstances indicate that the carrying amounts of an asset may not be recoverable. Impairment indicators include, among other conditions, cash flow deficits, historic or anticipated declines in revenue or operating profit and adverse legal or regulatory developments. If it is determined that such indicators are present and the review indicates that the assets will not be fully recoverable, based on undiscounted estimated cash flows over the remaining amortization periods, their carrying values are reduced to estimated fair market value. Estimated fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. December 31,  (in millions) 2001 2000 Goodwill $ 579 $ 703 Accumulated amortization ( 245 ) ( 271 ) 334 432 Other intangible assets 173 181 Accumulated amortization ( 105 ) ( 102 ) 68 79 Total goodwill and  other intangible assets $ 402 $ 511 Goodwill and Other Intangible Assets Investments in Unconsolidated Affiliates Income Taxes 35 Edwards Lifesciences Corporation 34 Edwards Lifesciences Corporation