XML 24 R9.htm IDEA: XBRL DOCUMENT
v3.20.4

Summary of Significant Accounting Policies | 12 Months Ended
--- | ---
Dec. 31, 2020
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] |
Significant Accounting Policies [Text Block] | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Louisiana-Pacific Corporation and our subsidiaries are a leading provider of high-performance building solutions that meet the demands of builders, remodelers and homeowners worldwide. Serving the new home construction, repair and remodeling, and outdoor structures markets, we have leveraged our expertise to become an industry leader known for innovation, quality and reliability. The Company operates 25 plants across the U.S., Canada, Chile, and Brazil through foreign subsidiaries, and operate facilities through 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" refer 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. generally accepted accounting principles (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. All dollar amounts are in millions except per share. 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,
| 2020 |  | 2019
Trade receivables | $ | 161 |  |  | $ | 111 |
Income tax receivable | 2 |  |  | 35 |
Other receivables | 23 |  |  | 19 |
Allowance for doubtful accounts | (2) |  |  | (1) |
| $ | 184 |  |  | $ | 164 |
Trade receivables are primarily generated by sales of our products to our wholesale and retail customers. Other receivables at December 31, 2020, and 2019, primarily consist of sales tax receivables, vendor rebates, 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, 2020, we had no available-for-sale securities and at December 31, 2019, we had $5 million ($19 million, par value) invested in auction rate securities (ARS). During 2020, we sold our ARS and recognized a $3 million gain on available-for-sale securities, which is included in investment income in the Consolidated Statements of Income. 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. Inventories Inventories are valued at the lower of cost or net realizable value. Inventory costs include materials, labor, and operating overhead. The FIFO (first-in, first out) or average cost methods are used to value our inventories as of December 31, 2020. Included in the inventory balance is a lower of cost or market adjustment of $12 million as of December 31, 2020, and $13 million as of December 31, 2019. Inventory consisted of the following:
| December 31,
| 2020 |  | 2019
Logs | $ | 49 |  |  | $ | 47 |
Other raw materials | 36 |  |  | 32 |
Semi-finished inventory | 28 |  |  | 26 |
Finished products | 146 |  |  | 160 |
Total | $ | 259 |  |  | $ | 265 |
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, 2020, and 2019, we had timber and timberlands of $18 million and $25 million, respectively. Timber 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, 2020, and 2019, we had timber licenses of $34 million and $38 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:
| December 31,
2020 |  | 2019
Property, plant, and equipment, at cost: |  |  |
Land, land improvements, and logging roads, net of road amortization | $ | 172 |  |  | $ | 168 |
Buildings | 356 |  |  | 350 |
Machinery and equipment | 1,971 |  |  | 1,965 |
Construction in progress | 63 |  |  | 46 |
| 2,562 |  |  | 2,529 |
Accumulated depreciation | (1,644) |  |  | (1,564) |
Property, plant, and equipment, net | $ | 918 |  |  | $ | 965 |
Depreciation is calculated on the straight-line basis over the estimated useful lives of the assets, which typically range from 10 to 20 years for buildings and land improvements, 3 to 15 years for equipment and the shorter of the lease term or estimated useful lives for leasehold improvements. Depreciation and amortization expense on property, plant, and equipment is included in our Consolidated Statements of Income as noted below:
| Year ended December 31,
2020 |  | 2019 |  | 2018
Cost of sales | $ | 103 |  |  | $ | 115 |  |  | $ | 113 |
Selling, general and administrative expenses | 3 |  |  | 3 |  |  | 3 |
Total depreciation and amortization | $ | 106 |  |  | $ | 118 |  |  | $ | 116 |
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 (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. During the year ended December 31, 2020, we recognized a non-cash impairment charge of $5 million associated with our off-site construction operation Entekra Holdings, LLC (Entekra) related, in part, to the impacts of the COVID-19 pandemic on that operation. Our 2019 and 2018 annual impairment assessment, which were performed during the fourth quarter of each year, did not result in impairments of our goodwill or intangible assets during the those years. See Note 6 below for further discussion of 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. The restricted cash balance at December 31, 2020, and 2019, was $0 million and $14 million, respectively. Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities were as follows:
| December 31,
| 2020 |  | 2019
Trade accounts payable | $ | 125 |  |  | $ | 127 |
Salaries and wages payable | 62 |  |  | 48 |
Accrued rebates | 44 |  |  | 34 |
Taxes other than income taxes | 15 |  |  | 7 |
Current portion of operating lease liabilities | 8 |  |  | 8 |
Other accrued liabilities | 13 |  |  | 18 |
Total Accounts payable and accrued liabilities | $ | 267 |  |  | $ | 242 |
Other accrued liabilities at December 31, 2020, and 2019, primarily consisted of reforestation liabilities, accrued rent, accrued interest, worker compensation liabilities, warranty reserves, and other items. Additionally, included in Accounts payable is $16 million and $15 million related to capital expenditures that had not yet been paid as of December 31, 2020 and 2019, respectively. Other Long-Term Liabilities Other long-term liabilities were as follows:
| December 31,
| 2020 |  | 2019
Pension benefit obligation | $ | 17 |  |  | $ | 23 |
Asset retirement obligations | 10 |  |  | 11 |
Uncertain tax positions | 9 |  |  | 37 |
Post-retirement obligations | 9 |  |  | 9 |
Warranty reserves | 6 |  |  | 6 |
Other | 35 |  |  | 39 |
Total Other long-term liabilities | $ | 86 |  |  | $ | 125 |
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 2020 and 2019 is summarized in the following table.
| Year ended December 31,
2020 |  | 2019
Beginning balance | $ | 11 |  |  | $ | 12 |
Accretion expense | 1 |  |  | 1 |
Adjusted to expense during the year | (1) |  |  | (2) |
Adjusted to other operating credits and charges, net | — |  |  | — |
Ending balance | $ | 10 |  |  | $ | 11 |
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 either net income or through accumulated paid-in capital, depending on the nature of the underlying security (preferred or common units). See Note 9 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 and restricted stock units is the closing stock price of LP’s common stock the day preceding the grant date. The fair value of our performance stock units is estimated using the Monte Carlo simulation pricing model. The key assumptions used in this model include expected volatility, risk-free rate, average and grant date stock prices. The estimate of expected volatility for performance units is based upon historical stock price volatility and the length of the performance period. The risk-free interest rate is based on zero coupon U.S. Treasury bonds. The beginning average stock price equals the average closing value stock price over the defined period of trading days with the assumption that dividends distributed during the period were reinvested. 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 Chilean, Brazilian, Argentinean, 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 of $20 million, $28 million and $21 million in 2020, 2019, and 2018, respectively, are principally expensed as incurred and included as part of selling, general, and administrative expenses within our Consolidated Statements of Income. Advertising costs include product displays, media production costs, agency fees, sponsorships, and cooperating advertising. 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. Differences 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.

X
- Definition SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] + References No definition available. + Details
Name: | lpx_SummaryOfSignificantAccountingPoliciesAbstract
Namespace Prefix: | lpx_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for all significant accounting policies of the reporting entity. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
Name: | us-gaap_SignificantAccountingPoliciesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration