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Summary of Significant Accounting Policies | 12 Months Ended
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Dec. 31, 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] |
Significant Accounting Policies [Text Block] | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Louisiana-Pacific Corporation and our subsidiaries are a leading provider of high-performance building solutions serving the new home construction, repair and remodeling, and outdoor structures markets. In addition to our U.S. operations, the Company also maintains manufacturing facilities in Canada, Chile, and Brazil through foreign subsidiaries and joint ventures. The principal customers for our building solutions are retailers, wholesalers, and homebuilding and industrial businesses in North America and South America, with limited sales to Asia, Australia, and Europe. References to "LP," "the Company," "we," "our," and "us" refers to Louisiana-Pacific Corporation and its consolidated subsidiaries as a whole. See Note 20 below for further information regarding our products and segments. Basis of Presentation The accompanying Consolidated Financial Statements have been prepared in accordance with U.S. GAAP. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results could differ from those estimates. The Consolidated Financial Statements include the accounts of LP and our controlled subsidiaries. All intercompany transactions, profits, and balances have been eliminated. Cash and Cash Equivalents Cash and cash equivalents include cash on hand and short-term investments of three months or less when purchased. These investments are stated at cost, which approximates market value. Receivables Receivables consisted of the following:
| December 31,
Dollar amounts in millions | 2019 |  | 2018
Trade receivables | $ | 111 |  |  | $ | 88 |
Income tax receivable | 35 |  |  | 16 |
Other receivables | 19 |  |  | 25 |
Allowance for doubtful accounts | (1 | ) |  | (1 | )
| $ | 164 |  |  | $ | 128 |
Trade receivables are primarily generated by sales of our products to our wholesale and retail customers. Other receivables at December 31, 2019 and 2018, primarily consist of sales tax receivables, vendor rebates, interest receivables, a receivable associated with an affiliate and other miscellaneous receivables. Investments Our long-term investments are classified as available-for-sale and are reported at estimated fair value. Unrealized gains and losses, net of tax, on these investments are reported as a separate component of “Accumulated comprehensive loss” in Stockholders’ Equity until realized. Impairment losses are charged to income for other-than-temporary declines in fair value. Realized gains and losses (including impairments) are recorded as investment income. For purposes of computing realized gains and losses, the cost is identified on a specific identification basis. As of December 31, 2019 and 2018, we had $5 million ($19 million, par value) and $6 million ($19 million, par value), respectively, invested in auction-rate securities (ARS). The ARS held by us are securities with long-term nominal maturities for which the interest rates may be reset through a Dutch auction each month. Our investments in ARS represent interests in collateralized debt obligations supported by pools of residential and commercial mortgages and other securities. The contractual maturities of these debt securities classified as available for sale at December 31, 2019, exceed one year. Fair Value of Financial Instruments We have, where appropriate, estimated the fair value of financial instruments. These fair value amounts may be significantly affected by the assumptions used, including the discount rate and estimates of cash flows. Accordingly, the estimates presented are not necessarily indicative of the amounts that could be realized in a current market exchange. Inventory Inventories are valued at the lower of cost or net realizable value. Inventory costs include materials, labor, and operating overhead. The LIFO (last-in, first-out) method is used for a minor portion of our log inventories with the remaining inventories valued at FIFO (first-in, first-out) or average cost. Included in the inventory balance is a lower cost of market adjustment of $13 million as of December 31, 2019, and $11 million as of December 31, 2018. Inventory consisted of the following:
| December 31,
Dollar amounts in millions | 2019 |  | 2018
Logs | $ | 47 |  |  | $ | 57 |
Other raw materials | 32 |  |  | 25 |
Semi-finished inventory | 26 |  |  | 23 |
Finished products | 160 |  |  | 168 |
Total | $ | 265 |  |  | $ | 273 |
Timber and Timberlands Timber and timberlands are comprised of timber deeds and allocations of the purchase price to Canadian timber harvesting licenses. Timber deeds are transactions in which we purchase timber, but not the underlying land. The cost of timber deeds is capitalized in timber and timberlands and charged to the cost of timber harvested as the volume is removed. Timber that has been severed but has not yet been delivered to a facility is included in timber and timberlands. As of December 31, 2019 and 2018, we had timber and timberlands of $25 million and 21 million, respectively. The values associated with timber licenses were allocated in the purchase price allocations for Le Groupe Forex (Forex), Peace Valley OSB, and the assets of Evans Forest Products. These licenses have a life of twenty to twenty-five years. These licenses are amortized on a straight-line basis over the life of the facilities. As of December 31, 2019 and 2018, we had timber licenses of $38 million and $41 million, respectively. Certain Canadian timber harvesting licenses also include future requirements for reforestation. The fair value of the future estimated reforestation obligation is accrued and recognized in cost of sales based on the volume of timber harvested; fair value is determined by discounting the estimated future cash flows using a credit adjusted risk-free rate. Subsequent changes to the fair value resulting from the passage of time and revisions to fair value calculations are recognized in earnings as they occur. Property, Plant, and Equipment Property, plant, and equipment, including capitalized interest, are recorded at cost and consisted of the following:
Dollar amounts in millions | December 31,
2019 |  | 2018
Property, plant, and equipment, at cost: |  |  |
Land, land improvements, and logging roads, net of road amortization | $ | 168 |  |  | $ | 169 |
Buildings | 350 |  |  | 330 |
Machinery and equipment | 1,965 |  |  | 1,949 |
Construction in progress | 46 |  |  | 148 |
| 2,529 |  |  | 2,596 |
Accumulated depreciation | (1,564 | ) |  | (1,586 | )
Property, plant, and equipment, net | $ | 965 |  |  | $ | 1,010 |
Depreciation of machinery and equipment is principally calculated by the units of production method, which approximates a straight-line basis over the estimated useful lives of the machinery and equipment (typically seven to fifteen years). Buildings, land improvements, and the remaining machinery and equipment are depreciated on a straight-line basis over their estimated useful lives, which typically range from three to twenty years. Depreciation expense is included in our Consolidated Statements of Income as noted below:
Dollar amounts in millions | Years ended December 31,
2019 |  | 2018 |  | 2017
Cost of sales | $ | 120 |  |  | $ | 117 |  |  | $ | 120 |
Selling, general and administrative expenses | 3 |  |  | 3 |  |  | 3 |
Total depreciation and amortization | $ | 123 |  |  | $ | 120 |  |  | $ | 123 |
Logging road construction costs are capitalized and included in land and land improvements. These costs are amortized as the timber volume adjacent to the road system is harvested. Long-lived assets to be held and used by us (primarily property, plant, and equipment and timber and timberlands) are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. When impairment is indicated, the book values of the assets are written down to their estimated fair value as calculated by the expected discounted cash flow or estimated net sales price. See Note 15 below for a discussion of charges related to impairments of property, plant, and equipment. Long-lived assets that are held for sale are written down to the estimated sales proceeds less cost to sell unless the estimated net proceeds exceed the carrying value. Goodwill and Intangible Assets Goodwill and indefinite-lived intangible assets are assessed annually for impairment during the fourth quarter or earlier upon the occurrence of certain events or substantive changes in circumstances. Impairment is evaluated by applying a fair value based test. Impairment losses would be recognized whenever the implied fair value of goodwill is less than its carrying value. The Company’s 2019, 2018 and 2017 annual impairment assessment, which were performed in the fourth quarter of each year, did not result in impairments of our goodwill and intangible assets. Investments in Affiliates We account for investments in affiliates when we do not have a controlling financial interest using the equity method under which LP’s share of earnings and losses of the affiliate is reflected in earnings and dividends are credited against the investment in affiliate when declared. Restricted Cash Our restricted cash accounts generally secure outstanding letters of credit. Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities were as follows:
| December 31,
Dollar amounts in millions | 2019 |  | 2018
Accounts payable | $ | 127 |  |  | $ | 116 |
Salaries and wages payable | 48 |  |  | 58 |
Accrued severance | 4 |  |  | 6 |
Taxes other than income taxes | 7 |  |  | 4 |
Accrued rebates | 34 |  |  | 30 |
Current portion of operating lease liabilities | 8 |  |  | — |
Other accrued liabilities | 14 |  |  | 20 |
Total Accounts payable and accrued liabilities | $ | 242 |  |  | $ | 234 |
Other accrued liabilities at December 31, 2019 and 2018, primarily consist of reforestation liabilities, accrued rent, uncertain tax positions, worker compensation liabilities, warranty reserves, and other items. Additionally, included in Accounts payable is $15 million and $22 million related to capital expenditures that had not yet been paid as of December 31, 2019, and as of December 31, 2018, respectively. Other Long-Term Liabilities Other long-term liabilities were as follows:
| December 31,
Dollar amounts in millions | 2019 |  | 2018
Asset retirement obligations | $ | 11 |  |  | $ | 12 |
Uncertain tax positions | 37 |  |  | 40 |
Post-retirement obligations | 9 |  |  | 8 |
Pension obligations, net | 25 |  |  | 25 |
Warranty reserves | 6 |  |  | 11 |
Other | 37 |  |  | 38 |
Total Other long-term liabilities | $ | 125 |  |  | $ | 134 |
Asset Retirement Obligations We record the fair value of the legal and conditional obligations to retire and remove long-lived assets in the period in which the obligation is incurred. These obligations primarily consist of monitoring costs on closed landfills, timber reforestation obligations associated with our timber licenses in Canada and site restoration costs. When the related liability is initially recorded, we capitalize the cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its settlement value, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, we recognize a gain or loss for any difference between the settlement amount and the liability recorded. The activity in our asset retirement obligation liability for 2019 and 2018 is summarized in the following table.
Dollar amounts in millions | Year ended December 31,
2019 |  | 2018
Beginning balance | $ | 12 |  |  | $ | 11 |
Accretion expense | 1 |  |  | 1 |
Adjusted to expense during the year | (2 | ) |  | 2 |
Adjusted to other operating credits and charges, net | — |  |  | (1 | )
Ending balance | $ | 11 |  |  | $ | 12 |
Income Taxes We account for income taxes under an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our Consolidated Financial Statements or tax returns. In estimating future tax consequences, we generally consider all expected future events other than the enactment of changes in tax laws or rates. The effect on deferred tax assets and liabilities of a change in tax rates will be recognized as income or expense in the period that includes the enactment date. Additionally, deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion of the deferred tax assets will not be realized. We recognize liabilities for uncertain tax positions through a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of the available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation process, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as we determine the probability for various outcomes. We evaluate these uncertain tax provisions when new information becomes available. These revaluations are based upon factors including, but not limited to, changes in circumstances, changes in tax law, successful settlement of issues under audit, and new audit activity. Such a change in recognition or measurement could result in recognition of a tax benefit or an increase to the related provision. We classify interest related to income tax liabilities or uncertain tax positions as interest expense or interest income and, if applicable, penalties are recognized as a component of income tax expense. Redeemable Noncontrolling Interest Redeemable noncontrolling interest in subsidiaries that is redeemable outside of our control is classified as mezzanine equity and measured at the greater of estimated redemption value at the end of each reporting period or the historical cost basis of the noncontrolling interest adjusted for cumulative earnings allocations. Net income attributed to noncontrolling interest is recorded in the Consolidated Statements of Income. Any adjustments to the redemption value of redeemable noncontrolling interest are recognized in accumulated paid-in capital. See Note 8 below for a further discussion of redeemable noncontrolling interest. Stock-Based Compensation We have stock award plans covering certain key employees and directors, which provide for awards of restricted stock, restricted stock units, performance stock units, stock-settled stock appreciation rights (SSARS), and stock options. In addition, we offer an Employee Stock Purchase Plan (“ESPP”) to employees. The fair value of our restricted stock, restricted stock units, and performance stock units is the closing stock price of the Company’s common stock the day preceding the grant date. Stock-based compensation expense for SSARS and stock options is estimated at the grant date based on an award’s fair value as calculated by the Black-Scholes option-pricing model and is recognized as expense over the requisite service period. The Black-Scholes model requires various highly judgmental assumptions, including expected volatility and option life. If any of the assumptions used in the Black-Scholes model change significantly, stock-based compensation expense for future grants may differ materially from that recorded in the current period related to options granted to date. In addition, we estimate the expected forfeiture rate and recognize expense for those shares expected to vest. We estimate the forfeiture rate based on historical experience. To the extent the actual forfeiture rate is different from the estimate, stock-based compensation expense is adjusted accordingly. Foreign Currency Translation The functional currency for our Canadian subsidiaries is the U.S. dollar. The books and records for these subsidiaries are maintained in the Canadian dollar. The financial statements of these foreign subsidiaries are remeasured into U.S. dollars using the historical exchange rate for property, plant, and equipment, timber and timberlands (related depreciation and amortization on both property, plant, and equipment and timber and timberlands), goodwill, and certain other non-monetary assets. We use the exchange rate at the balance sheet date for the remaining assets and liabilities, including deferred taxes. A weighted-average exchange rate is used for each period for revenues and expenses. These transaction gains or losses are recorded in “Other non-operating items” on the Consolidated Statements of Income. The functional currencies of our Argentinean, Brazilian, Chilean, Columbian, and Peruvian subsidiaries are their respective local currencies, and therefore, their books and records are maintained in local currency. Translation adjustments, which are based upon the exchange rate at the balance sheet date for assets and liabilities and the weighted-average rate for the income statement, are recorded in “Accumulated comprehensive loss” in Stockholders’ equity on the Consolidated Balance Sheets. Advertising costs Advertising costs, which amounted to $28 million, $21 million and $19 million in 2019, 2018 and 2017, respectively, are principally expensed as incurred. Advertising costs include product displays, media production costs, agency fees, sponsorships, and cooperating advertising. Customer Program Costs Customer program costs and incentives, including rebates and promotion and volume allowances, are accounted for as a reduction in Net sales at the time the program is initiated and/or the revenue is recognized. These costs are recorded at the time of sale or the implementation of the program based on management’s best estimates. Estimates are based on historical and projected experience for each type of program or customer. As of December 31, 2019 and 2018, we had $34 million and $30 million, respectively, accrued as customer rebates. Other Operating Credits and Charges, Net We classify significant amounts unrelated to ongoing core operating activities as “Other operating credits and charges, net” in the Consolidated Statements of Income. Such items include, but are not limited to, restructuring charges (including severance charges), charges to establish and maintain litigation or environmental reserves, product reserves, retirement charges, gains or losses from settlements with governmental or other organizations, and gains (loss) on the sale of long-lived assets. Due to the nature of these items, amounts in the income statement can fluctuate from year to year. The determination of which items are considered significant and unrelated to core operations is based upon management’s judgment. Retirement Benefits We are required to use actuarial methods and assumptions in the valuation of defined benefit obligations and the determination of expense. Difference between actual and expected results or changes in the values of the obligations and plan assets are not recognized in earnings as they occur but, instead, systematically and gradually over subsequent periods. See Note 18 of the Notes to the Consolidated Financial Statements for further information. Comprehensive Income Comprehensive income consists of net income and other gains and losses affecting stockholders’ equity that are excluded from net income, including foreign currency translation adjustments, costs associated with pension or other post-retirement benefits that have not been recognized as components of net periodic benefit costs, and net unrealized gains or losses on securities and is presented in the accompanying Consolidated Statements of Comprehensive Income.

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