Property, Plant, and Equipment
The financial accounting term property, plant, and equipment is used to describe assets of a long lasting nature, which are used in the normal operation of the company. The most common types of property, plant, and equipment are land, buildings, and machinery.
Property, plant and equipment appear as assets on a company’s balance sheet.
Property, plant and equipment, also known as PP&E, are tangible, fixed assets. As such, they are not readily converted into cash like current assets. Examples of assets that fall into this category include vehicles, manufacturing equipment, machinery, buildings, and office equipment.
Since long term, fixed assets typically provide benefits over an extended period of time, the cost of these assets flow to the income statement as depreciation expense. The net book value of PP&E is shown on the balance sheet. Net book value is calculated as the historical cost (purchase price) of the asset minus accumulated depreciation.