Properties

12 Months Ended

Dec. 31, 2024

Property, Plant and Equipment [Abstract]

The following tables list the major categories of property and equipment as well as the weighted-average estimated useful life for each category (in years):


Millions, Except Estimated Useful Life	Cost		Accumulated Depreciation		Net Book Value		Estimated Useful Life
As of December 31, 2024
Land	$	5,441	N/A		$	5,441	N/A
Road:
Rail and other track material	19,283		$	7,642	11,641		46
Ties	12,358		4,109		8,249		34
Ballast	6,495		2,182		4,313		34
Other roadway [a]	23,913		5,681		18,232		47
Total road	62,049		19,614		42,435		N/A
Equipment:
Locomotives	9,517		3,724		5,793		18
Freight cars	3,011		1,037		1,974		22
Work equipment and other [b]	1,222		482		740		17
Total equipment	13,750		5,243		8,507		N/A
Technology and other	1,431		640		791		12
Construction in progress	1,169		-		1,169		N/A
Total	$	83,840	$	25,497	$	58,343	N/A

[a]Other roadway includes grading, bridges and tunnels, signals, buildings, and other road assets.

[b]For retirements of depreciable railroad properties that do not occur in the normal course of business, a gain or loss may be recognized if the retirement meets each of the following three conditions: (a) is unusual, (b) is material in amount, and (c) varies significantly from the retirement profile identified through our depreciation studies. In the second quarter of 2024, we sold a large portion of an intermodal equipment asset class resulting in a $46 million gain recognized in other expense in our Consolidated Statements of Income.


Millions, Except Estimated Useful Life	Cost		Accumulated Depreciation		Net Book Value		Estimated Useful Life
As of December 31, 2023
Land	$	5,426	N/A		$	5,426	N/A
Road:
Rail and other track material	18,837		$	7,344	11,493		42
Ties	11,985		3,895		8,090		34
Ballast	6,345		2,061		4,284		34
Other roadway [a]	23,175		5,368		17,807		47
Total road	60,342		18,668		41,674		N/A
Equipment:
Locomotives	9,295		3,591		5,704		18
Freight cars	2,765		956		1,809		23
Work equipment and other	1,344		546		798		17
Total equipment	13,404		5,093		8,311		N/A
Technology and other	1,388		574		814		12
Construction in progress	1,173		-		1,173		N/A
Total	$	81,733	$	24,335	$	57,398	N/A

[a]Other roadway includes grading, bridges and tunnels, signals, buildings, and other road assets.

Property and Depreciation – Our railroad operations are highly capital-intensive, and our large base of homogeneous, network-type assets turns over on a continuous basis. Each year we develop a capital program for the replacement of assets and for the acquisition or construction of assets that enable us to enhance our operations or provide new service offerings to customers. We currently have more than 60 depreciable asset classes, and we may increase or decrease the number of asset classes due to changes in technology, asset strategies, or other factors.

We determine the estimated service lives of depreciable railroad assets by means of depreciation studies. We perform depreciation studies at least every 3 years for equipment and every 6 years for track assets (i.e., rail and other track material, ties, and ballast) and other road property. Our depreciation studies take into account the following factors:

•Statistical analysis of historical patterns of use and retirements of each of our asset classes,

•Evaluation of any expected changes in current operations and the outlook for continued use of the assets,

•Evaluation of technological advances and changes to maintenance practices, and

•Expected salvage to be received upon retirement.

For rail in high-density traffic corridors, we measure estimated service lives in millions of gross tons per mile of track. It has been our experience that the lives of rail in high-density traffic corridors are closely correlated to usage (i.e., the amount of weight carried over the rail). The service lives also vary based on rail weight, rail condition (e.g., new or secondhand), and rail type (e.g., straight or curve). Our depreciation studies for rail in high-density traffic corridors consider each of these factors in determining the estimated service lives. For rail in high-density traffic corridors, we calculate depreciation rates annually by dividing the number of gross ton-miles carried over the rail (i.e., the weight of loaded and empty freight cars, locomotives, and maintenance of way equipment transported over the rail) by the estimated service lives of the rail measured in millions of gross tons per mile. For all other depreciable assets, we compute depreciation based on the estimated service lives of our assets as determined from the analysis of our depreciation studies. Changes in the estimated service lives of our assets and their related depreciation rates are implemented prospectively.

Under the group method of depreciation, the historical cost (net of salvage) of depreciable property that is retired or replaced in the ordinary course of business is charged to accumulated depreciation and no gain or loss is recognized. The historical cost of certain track assets is estimated by multiplying the current replacement cost of track assets by a historical index factor derived from (a) inflation indices published by the Bureau of Labor Statistics and (b) the estimated useful lives of the assets as determined by our depreciation studies. The indices were selected because they closely correlate with the major costs of the properties comprising the applicable track asset classes. Because of the number of estimates inherent in the depreciation and retirement processes and because it is impossible to precisely estimate each of these variables until a group of property is completely retired, we continually monitor the estimated service lives of our assets and the accumulated depreciation associated with each asset class to ensure our depreciation rates are appropriate. In addition, we determine if the recorded amount of accumulated depreciation is deficient (or in excess) of the amount indicated by our depreciation studies. Any

deficiency (or excess) is amortized as a component of depreciation expense over the remaining service lives of the applicable classes of assets.

For retirements of depreciable railroad properties that do not occur in the normal course of business, a gain or loss may be recognized if the retirement meets each of the following three conditions: (a) is unusual, (b) is material in amount, and (c) varies significantly from the retirement profile identified through our depreciation studies. A gain or loss is recognized in other income when we sell land or dispose of assets that are not part of our railroad operations.

In 2024, we sold a large portion of an intermodal equipment asset class resulting in a gain recognized in other expense in our Consolidated Statements of Income. No gains or losses were recognized due to the retirement of depreciable railroad properties in 2023 or 2022.

We review construction in progress assets that have not yet been placed into service, for impairment when events or changes in circumstances indicate that the carrying amount of a long-lived asset or assets may not be recoverable. If impairment indicators are present and the estimated future undiscounted cash flows are less than the carrying value of construction in progress assets when grouped with other assets and liabilities at the lowest level where identifiable cash flows are largely independent, the carrying value is reduced to the estimated fair value.

When we purchase an asset, we capitalize all costs necessary to make the asset ready for its intended use. However, many of our assets are self-constructed. A large portion of our capital expenditures is for replacement of existing track assets and other road properties, which is typically performed by our employees, and for track line expansion and other capacity projects. Costs that are directly attributable to capital projects (including overhead costs) are capitalized. Direct costs that are capitalized as part of self-constructed assets include material, labor, and work equipment. Indirect costs are capitalized if they clearly relate to the construction of the asset.

Costs incurred that extend the useful life of an asset, improve the safety of our operations, or improve operating efficiency are capitalized, while normal repairs and maintenance are expensed as incurred. Total expense for repairs and maintenance incurred was approximately $2.3 billion for 2024, $2.5 billion for 2023, and $2.4 billion for 2022.

Assets held under finance leases are recorded at the lower of the net present value of the minimum lease payments or the fair value of the leased asset at the inception of the lease. Amortization expense is computed using the straight-line method over the shorter of the estimated useful lives of the assets or the period of the related lease.