Johnson & Johnson, the world€™s leading and most diversified health-care corporation, serves its customers through specialized worldwide franchises. Each of its franchises consists of a number of companies throughout the world that focus on a particular health-care market, such as surgical sutures, consumer pharmaceuticals, or contact lenses. Information related to its property, plant, and equipment in its 2011 annual report is shown in the notes to the financial statements below.

1. Property, Plant and Equipment and Depreciation
Property, plant and equipment are stated at cost. The Company utilizes the straight-line method of depreciation over the estimated useful lives of the assets:
Building and building equipment ... 20€“40 years
Land and leasehold improvements .... 10€“20 years
Machinery and equipment ....... 2€“13 years

4. Property, Plant and Equipment
At the end of 2011 and 2010, property, plant and equipment at cost and accumulated depreciation were:

The Company capitalizes interest expense as part of the cost of construction of facilities and equipment. Interest expense capitalized in 2011, 2010 and 2009 was $84 million, $73 million and $101 million, respectively.
Depreciation expense, including the amortization of capitalized interest in 2011, 2010 and 2009 was $2.3 billion, $2.2 billion and $2.1 billion, respectively.

Johnson & Johnson€™s provided the following selected information in its 2011 cash flow statement.

Instructions
(a) What was the cost of buildings and building equipment at the end of 2011?
(b) Does Johnson & Johnson use a conservative or liberal method to depreciate its property, plant, and equipment?
(c) What was the actual interest expense paid by the company in 2011?
(d) What is Johnson & Johnson€™s free cash flow? From the information provided, comment on Johnson & Johnson€™s financialflexibility.

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(dollars in millions) Land and land improvements Buildings and building equipment Machinery and equipment Construction in progress 2011 $ 754 9,389 19,182 2,504 31,829 17,090 $14,739 2010 $ 738 9,079 18,032 2,577 30,426 15,873 $14,553 Less accumulated depreciation Johnson & Johnson 2011 Annual Report Consolidated Financial Statements (excerpts) Net cash flows from operating activities Cash flows from investing activities $14,298 Additions to property, plant and equipment Proceeds from the disposal of assets Acquisitions, net of cash acquired Purchases of investments Sales of investments Other (primarily intangibles) (2,893) 1,342 (2,797) (29,882) 30,396 (778) (4,612) Net cash used by investing activities Cash flows from financing activities Dividends to shareholders Repurchase of common stock Proceeds from short-term debt Retirement of short-term debt Proceeds from long-term debt Retirement of long-term debt Proceeds from the exercise of stock options/excess tax benefits (6,156) (2,525) 9,729 (11,200) 4,470 (16) 1,246 Net cash used by financing activities Effect of exchange rate changes on cash and cash equivalents Increase in cash and cash equivalents Cash and cash equivalents, beginning of year (Note 1) Cash and cash equivalents, end of year (Note 1) Supplemental cash flow data Cash paid during the year for: (4,452) (47) 5,187 19,355 $24.542 Interest Income taxes 576 2,970