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Summary of Significant Accounting Policies | 12 Months Ended
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Dec. 31, 2023
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, reliability, and sustainability. The principal customers for our building solutions are retailers, wholesalers, and home building and industrial businesses in North America and South America, and we make limited sales to customers in Asia, Australia, and Europe. The Company operates 23 plants across the U.S., Canada, Chile, and Brazil, in certain cases, through foreign subsidiaries, and operates additional facilities through a joint venture. References to "LP," the "Company," "we," "our," and "us" refer to Louisiana-Pacific Corporation and its consolidated subsidiaries as a whole. In May 2023, we acquired an idle manufacturing facility in Wawa, Ontario, Canada from a third party for $80 million. We anticipate converting the Wawa manufacturing facility into an LP SmartSide Trim & Siding mill in the future according to the needs of our business. We are evaluating project schedules and market demand to determine when we will begin related construction work. See "Note 18 - Segment Information" 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. 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 (dollars in millions):
| December 31,
| 2023 |  | 2022
Trade receivables | $ | 104 |  |  | $ | 106 |
Income tax receivables | 27 |  |  | 4 |
Other receivables | 26 |  |  | 19 |
Allowance for doubtful accounts | (2) |  |  | (1) |
Total Receivables | $ | 155 |  |  | $ | 127 |
Trade receivables are primarily generated by sales of our products to our wholesale and retail customers. Other receivables at December 31, 2023 and 2022 primarily consisted of sales tax receivables, vendor rebates, and other miscellaneous receivables. Fair Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. We are required to classify these financial assets and liabilities into two groups: (1) recurring, measured on a periodic basis, and (2) non-recurring, measured on an as-needed basis. There are three levels of inputs that may be used to measure fair value: Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2 Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; or valuations based on models where the significant inputs are observable or can be corroborated by observable market data. Level 3 Valuations based on models where significant inputs are not observable. Unobservable inputs are used when little or no market data is available and reflect the Company’s own assumptions about the assumptions market participants would use. The Company's financial instruments consist of cash and cash equivalents, short-term receivables, trade payables, debt instruments, and trading securities. Carrying amounts reported on the balance sheet for cash and cash equivalents, receivables, and accounts payable approximate fair value due to the short-term maturity of these instruments. See "Note 10 - Long Term Debt" below for further information regarding the fair value of long-term debt instruments. Trading securities consist of rabbi trust financial assets, which are recorded in other assets in our Consolidated Balance Sheets. The rabbi trust holds assets attributable to the elections of certain management employees to defer the receipt of a portion of their compensation. The assets of the rabbi trust are invested in mutual funds and are reported at fair value based on active market quotations, which represent Level 1 inputs. 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, 2023. Inventories include a lower of cost or market adjustment of $7 million and $22 million as of December 31, 2023, and 2022, respectively. Inventory consisted of the following (dollars in millions):
| December 31,
| 2023 |  | 2022
Logs | $ | 81 |  |  | $ | 59 |
Other raw materials | 53 |  |  | 72 |
Semi-finished inventory | 27 |  |  | 25 |
Finished products | 217 |  |  | 180 |
Total Inventories | $ | 378 |  |  | $ | 337 |
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, 2023, and 2022, we had timber and timberlands of $7 million and $12 million, respectively. Timber licenses have a life of 20 to 25 years. These licenses are amortized on a straight-line basis over the life of the facilities. As of December 31, 2023 and 2022, we had timber licenses of $25 million and $28 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 (dollars in millions):
| December 31,
| 2023 |  | 2022
Land, land improvements, and logging roads, net of road amortization | $ | 212 |  |  | $ | 193 |
Buildings | 493 |  |  | 428 |
Machinery and equipment | 2,352 |  |  | 2,124 |
Construction in progress | 236 |  |  | 253 |
| 3,293 |  |  | 2,998 |
Accumulated depreciation | (1,753) |  |  | (1,672) |
Property, plant, and equipment, net | $ | 1,540 |  |  | $ | 1,326 |
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets, which typically range from 5 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 was included in our Consolidated Statements of Income as noted below (dollars in millions):
| Year Ended December 31,
2023 |  | 2022 |  | 2021
Cost of sales | $ | 111 |  |  | $ | 121 |  |  | $ | 107 |
Selling, general and administrative expenses | 4 |  |  | 4 |  |  | 2 |
Total depreciation and amortization | $ | 115 |  |  | $ | 124 |  |  | $ | 109 |
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 13 - Impairment of Long-Lived Assets" 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. In accordance with Accounting Standards Codification (ASC) 350, Intangibles – Goodwill and Other, companies may opt to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. A qualitative assessment includes factors such as financial performance, industry and market metrics, and other factors affecting the reporting unit. If this assessment concludes that it is more likely than not that the fair value of a reporting unit exceeds its carrying value, then goodwill is not considered impaired, and no further impairment testing is required. Conversely, if the qualitative assessment concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we must then compare the fair value of the reporting unit to its carrying value. Impairment is evaluated by applying a fair value-based test. Impairment losses would be recognized when the implied fair value of goodwill is less than its carrying value. In 2023, we announced the shutdown of our off-site framing operation Entekra Holdings LLC (Entekra), resulting in impairment charges of $9 million related to definite-lived intangible assets. During the year ended December 31, 2021, we recognized non-cash impairment charges of $5 million, associated with the remaining goodwill from the purchase of Entekra. See "Note 5 - Goodwill and Other Intangible Assets" below for further discussion. 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 the affiliate when declared. Restricted Cash Our restricted cash accounts generally secure outstanding letters of credit. The restricted cash balance at December 31, 2022 was $14 million. There were no restricted cash balances as of December 31, 2023. Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities were as follows (dollars in millions):
| December 31,
| 2023 |  | 2022
Trade accounts payable | $ | 141 |  |  | $ | 178 |
Salaries and wages payable | 57 |  |  | 66 |
Accrued customer incentives | 37 |  |  | 46 |
Taxes other than income taxes | 3 |  |  | 10 |
Current portion of operating lease liabilities | 6 |  |  | 8 |
Other accrued liabilities | 10 |  |  | 9 |
Total Accounts payable and accrued liabilities | $ | 254 |  |  | $ | 317 |
Other accrued liabilities at December 31, 2023 and 2022, primarily consisted of accrued interest, worker compensation liabilities, warranty reserves, and other items. Additionally, trade accounts payable included $15 million and $48 million related to capital expenditures that had not yet been paid as of December 31, 2023 and 2022, respectively. Other Long-Term Liabilities Other long-term liabilities were as follows (dollars in millions):
| December 31,
| 2023 |  | 2022
Post-retirement obligations | $ | 7 |  |  | $ | 7 |
Asset retirement obligations | 8 |  |  | 8 |
Uncertain tax positions | 15 |  |  | 7 |
Warranty reserves | 6 |  |  | 6 |
Pension benefit obligation | 2 |  |  | 1 |
Other | 23 |  |  | 25 |
Total Other long-term liabilities | $ | 61 |  |  | $ | 53 |
Other long-term liabilities at December 31, 2023 and 2022, consisted primarily of workers' compensation liabilities and investment tax incentives associated with property, plant, and equipment. Asset Retirement Obligations We record the fair value of the legal and conditional obligations to retire and remove long-lived assets in the periods in which the obligations are 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 2023 and 2022 is summarized in the following table (dollars in millions).
| Year Ended December 31,
2023 |  | 2022
Beginning balance | $ | 8 |  |  | $ | 8 |
Accretion expense | — |  |  | — |
Adjusted to expense (cost of sales and other operating credits and charges, net) | — |  |  | (1) |
Payments made | — |  |  | — |
Ending balance | $ | 8 |  |  | $ | 8 |
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 the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. 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. We are subject to global intangible low-taxed income, an incremental tax on foreign income. We have made an accounting election to record this tax in the period the tax arises. Stock-Based Compensation We have stock award plans covering certain key employees and directors, which provide for awards of 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, and average and grant date stock prices. The estimate of expected volatility for performance stock 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, Colombian, Peruvian, and Paraguayan subsidiaries are their respective local currencies. Our Argentinean subsidiary operates under a highly inflationary economy and uses the Chilean Peso as the functional currency. Assets and liabilities are translated into U.S. dollars using rates of exchange at the balance sheet date. 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. Transaction gains and losses are recorded in Other non-operating items on the Consolidated Statements of Income. Advertising costs Advertising costs of $25 million, $28 million, and $24 million in 2023, 2022, and 2021, 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 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), business exit charges, charges to establish and maintain litigation or environmental reserves, product reserves, gains or losses from settlements with governmental or other organizations, and gains or losses on the sale or disposal 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. Actuarial gains or losses, curtailments, prior service costs or credits, and transition obligations not previously recognized are recorded as a component of Accumulated comprehensive loss. 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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