Percentage of total inventories priced at LIFO

  
Advertising expenses— Advertising expenses are recorded as expense in the year incurred. These costs were $50 million, $43 million and $48 million for the years ended December 31, 2021, 2020 and 2019, respectively.  
Income taxes— The Company utilizes the asset and liability method of accounting for income taxes. Deferred income taxes are determined based on the estimated future tax effects of differences between the financial and tax bases of assets and liabilities given the provisions of the enacted tax laws. Valuation allowances are established when it is estimated that it is more likely than not that the tax benefit of the deferred tax asset will not be realized.  
Cash and equivalents— Cash and equivalents include cash on hand and instruments having original maturities of three months or less. Cash and equivalents are stated at cost, which approximates fair value.  
Trade receivables— Trade receivables are net of allowances for doubtful accounts. The changes in the allowance for doubtful accounts for the years ended December 31, 2021, 2020 and 2019 were as follows:  


|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| In millions | 2021 |  | 2020 |  | 2019 |
| Beginning balance | $ | 29  |  |  | $ | 20  |  |  | $ | 21  |  |
| Provision charged to expense | 3  |  |  | 7  |  |  | 6  |  |
| Acquisitions and divestitures | 2  |  |  | —  |  |  | —  |  |
| Write-offs, net of recoveries | (5) |  |  | (4) |  |  | (4) |  |
| Transfer (to)/from assets held for sale | —  |  |  | 2  |  |  | (2) |  |
| Foreign currency translation/other | (1) |  |  | 4  |  |  | (1) |  |
| Ending balance | $ | 28  |  |  | $ | 29  |  |  | $ | 20  |  |

  
Inventories— Inventories are stated at the lower of cost or net realizable value and include material, labor and factory overhead. The last-in, first-out ("LIFO") method is used to determine the cost of inventories at certain U.S. businesses. The first-in, first-out ("FIFO") method, which approximates current cost, is used for all other inventories. Inventories priced at LIFO were approximately 19% of total inventories as of both December 31, 2021 and 2020. If the FIFO method was used for all inventories, total inventories would have been approximately $118 million and $82 million higher than reported at December 31, 2021 and 2020, respectively. The major classes of inventory at December 31, 2021 and 2020 were as follows:  


|  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |
| In millions | 2021 |  | 2020 |
| Raw material | $ | 716  |  |  | $ | 454  |  |
| Work-in-process | 208  |  |  | 136  |  |
| Finished goods | 888  |  |  | 681  |  |
| LIFO reserve | (118) |  |  | (82) |  |
| Total inventories | $ | 1,694  |  |  | $ | 1,189  |  |

  
Net plant and equipment— Net plant and equipment are stated at cost, less accumulated depreciation. Renewals and improvements that increase the useful life of plant and equipment are capitalized. Maintenance and repairs are charged to expense as incurred. Net plant and equipment consisted of the following at December 31, 2021 and 2020:  


|  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |
| In millions | 2021 |  | 2020 |
| Land | $ | 198  |  |  | $ | 204  |  |
| Buildings and improvements | 1,462  |  |  | 1,432  |  |
| Machinery and equipment | 3,898  |  |  | 3,824  |  |
| Construction in progress | 142  |  |  | 133  |  |
| Gross plant and equipment | 5,700  |  |  | 5,593  |  |
| Accumulated depreciation | (3,891) |  |  | (3,816) |  |
| Net plant and equipment | $ | 1,809  |  |  | $ | 1,777  |  |

  
50
