Property and Equipment, net

12 Months Ended

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

8. Property and Equipment, net

Property and equipment, net, consists of the following:


(in millions)	December 31, 2022		January 1, 2022
Building and building improvements	$	151.0	$	142.1
Machinery, equipment and tooling	149.4		103.5
Land	65.1		57.0
Operating lease assets(1)	50.2		—
Computer equipment and software	42.1		32.5
Transportation, vehicles and other	32.7		33.1
Leasehold improvements	32.3		21.9
Furniture and office equipment	19.4		14.2
Demonstration units	11.2		0.9
Construction-in-progress (CIP)	50.6		25.1
Total property and equipment	604.0		430.3
Accumulated depreciation	(201.5)		(157.5)
Property and equipment, net	$	402.5	$	272.8

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(1) Effective January 2, 2022, the Company adopted ASU 2021-05, resulting in the Company recording these operating lease assets within property, plant, and equipment, net.

A significant portion of the increase in property and equipment was attributable to the Sound United Acquisition. See Note 18, “Business Combinations”, for further details.

For the years ended December 31, 2022, January 1, 2022 and January 2, 2021, depreciation expense of property and equipment was $43.0 million, $25.3 million and $21.8 million, respectively.

For the years ended December 31, 2022, January 1, 2022 and January 2, 2021, depreciation expense of operating lease assets was $4.4 million, $0.5 million and $0.4 million, respectively.

For the years ended December 31, 2022 and January 1, 2022, $4.3 million and $0.5 million of equipment leased to customers was amortized to cost of goods sold, respectively. As of December 31, 2022 and January 1, 2022, accumulated amortization of equipment leased to customers was $2.1 million and $0.5 million, respectively.

The balance in CIP at December 31, 2022 and January 1, 2022, related primarily to the capitalized implementation costs related to a new enterprise resource planning software system and costs related to equipment and other facility improvements at the Company’s corporate headquarters, as well as at a new research and development facility, the underlying assets for which have not been completed or placed into service.

On February 14, 2022, the Company’s wholly owned subsidiary, Masimo Canada ULC, entered into a Purchase and Sale Agreement (Purchase Agreement) with Keltic (Prior) Development Limited Partnership (Vendor) for the purchase of a property in Vancouver, British Columbia, Canada for a purchase price of CAD123.0 million, plus goods and services tax (Purchase Price), subject to certain adjustments. The Company has paid CAD21.0 million as a deposit towards the purchase. The balance of the Purchase Price will be due and payable upon the closing of the transaction, which is currently expected to occur during the second half of 2024.