04-HP-876_newMDA.qxd 12/15/04 3:04 PM Page 46 CRITICAL ACCOUNTING POLICIES The Company’s consolidated financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation. The following is a discussion  of the critical accounting policies, which relate to property, plant and equipment, impairment of long-liv ed assets, self-insurance accruals,  and revenue recognition. Other significant accounting policies are  summarized in Note 1 in the notes to the consolidated financial  statements. Property plant and equipment, including renewals and betterments, are stated at cost, while maintenance and repairs are expensed as incurred. Interest costs applicable to the constr uction of qualifying assets are  capitalized as a component of the cost of such assets. The Company provides for the depreciation of pr oper ty, plant and equipment using the straight-line method over the estimated useful lives of the assets. Upon retirement or other disposal of fixed assets, the cost and related accumulated depreciation are remov ed from the respective accounts and any gains or losses are recorded in r esults of operations. The Company’s management assesses the potential impairment of its long-lived assets whenever events or changes in conditions indicate that the carrying value of an asset may not be recoverable. Changes that trigger such an assessment may include equipment obsolescence, changes in the market demand for a specific asset, periods of relatively low rig utilizations, declining revenue per rig day, declining cash mar- gin per rig day completion of specific contracts, and/or overall changes in general market conditions. If a review of the long-lived assets indicates that the carrying v alue of certain of these assets is more 47