PP&E – What is PP&E?
PP&E - an abbreviation of property, plant and equipment - is a company asset which is essential to the running of a business and cannot be easily liquidated.
Debitoor invoicing software helps small businesses track company assets, including PP&E. Try Debitoor free for 7 days.
Examples of PP&E include: land, offices, warehouses, factories, machinery and vehicles.
Businesses and industries which require a large amount of PP&E are known as ‘capital intensive’.
What kind of asset is PP&E?
PP&E is a fixed, tangible asset. It is a tangible asset because property, plant and equipment are physical items with a clear purchase value, and a fixed asset because PP&E cannot easily be sold or turned into cash and is expected to add value to a business for over a long period of time.
PP&E in accounting
Property, plant and equipmentshould be recorded on the balance sheet, recording the cost of purchasing the asset plus any costs associated with making the asset fit for purpose – this combined amount is known as the ‘historical cost’.
For example, if a company purchases a new office, the historical cost would include the money spent on the initial purchase, plus any money spent on refurbishments, redecorating or other improvements.
Because fixed assets depreciate over time, the value of PP&E should be adjusted at the end of each accounting period using amortisation. However, land should not be amortised because land often increases in value. Instead, land should be represented at the current market value.
Property, plant and equipmentin Debitoor
With Debitoor invoicing software, you can easily track company assets, including PP&E.
When you create a new expense in Debitoor, you can choose whether to mark it as an asset. If you select this option, you can choose which category the asset falls under, then turn on depreciation. Debitoor automatically applies straight-line depreciation to any new asset, helping you break down the cost of your asset over a number of years.