Introduction to Property, Plant & Equipment (PP&E)
Understanding Long-Lived Tangible Assets
Property, Plant & Equipment (PP&E), also called fixed assets or tangible long-lived assets, consists of physical assets acquired for use in business operations rather than for resale. These assets provide economic benefits over multiple accounting periods and are capitalized rather than immediately expensed.
- Used in normal business operations.
- Expected to benefit more than one accounting period.
- Reported as noncurrent assets.
- Subject to depreciation, except land.
Note
PP&E is one of the most heavily tested FAR topics because it combines asset recognition, capitalization, depreciation, disposal, and impairment.
Summary
PP&E represents tangible assets that help generate revenue over many years and are reported as noncurrent assets.