BSOM 1G

PROPERTY, PLANT &

EQUIPMENT
GROUP 4
CONTENT: SUB TOPIC
01 NATURE OF FIXED ASSETS

02 ACCOUNTING FOR DEPRECIATION

03 CAPITAL AND REVENUE EXPENDITURES

04 DISPOSAL OF FIXED ASSETS

05 INTANGIBLE ASSETS

06 FINANCIAL REPORTING FOR FIXED AND INTANGIBLE ASSETS

07 UNDERSTANDING OF THE TOPIC

LEARNING
OBJECTIVES:
After this presentation of our group we hope
and will do our very best for you to identify
processes involved in the acquisition of
property, plant & equipment.

You must be able to understand the different

methods of computing for depreciation. We
are happy to answer any concerns or
confusion about our topic.
 PROPERTY, PLANT, AND
EQUIPMENT
What is PP&E? Property, plant, and equipment (PP&E) are long-term assets
vital to business operations and not easily converted into
cash. Property, plant, and equipment are tangible assets,
meaning they are physical in nature or can be touched. The
total value of PP&E can range from very low to extremely
high compared to total assets. It is important to note when
calculating equity.

Property, plant, and equipment are also called fixed

assets, meaning they are physical assets that a
company cannot easily liquidate.
PP&E are long-term assets vital to business operations
and the long-term financial health of a company.
Purchases of PP&E are a signal that management has
faith in the longterm outlook and profitability of its
company
EXAMPLES OF PP&E
01 LAND

02 EQUIPMENTS

03 VEHICLES

04 MACHINARY

05 FURNITURE

06 INVENTORY

07 SECURITIES LIKE STOCKS, BOND

AND CASH
 01 02 03 04

INFORMATION INVESTING LIQUIDATING ACCOUNTING

Property, plant, and A company investing in PP&E may be PP&E is recorded on a
equipment are also PP&E is a good sign for liquidated when they company's financial
called fixed assets, investors. A fixed asset are no longer of use statements, specifically
meaning they are is a sizable investment or when a company is on the balance sheet.
physical assets that a in a company's experiencing financial PP&E is initially measured
company cannot easily future.Purchases of difficulties. according to its historical
liquidate. PP&E are a signal that cost, which is the actual
management has faith purchase cost and the
in the long-term outlook costs associated with
and profitability of its bringing assets to its
company. intended use.
PP&E FORMULA
AND CALCULATION
To calculate PP&E add the amount of
gross property, plant, and equipment,
listed on the balance sheet, to capital NET PPE=GROSS
expenditures. Next, subtract PPE+CAPITAL
accumulated depreciation from the
result. EXPENDITURES−
As a reminder, accumulated depreciation
is the total amount of a company's cost
ADWHERE:AD=
allocated to depreciation expense since ACCUMULATED
the asset was put into use. Depreciation is
the process of allocating the cost of a DEPRECIATION
tangible asset over its useful life and is
used to account for declines in value. In
most cases, companies will list their net
PP&E on their balance sheet when
reporting financial results, so the
calculation has already been done.
To calculate PP&E, add the amount of gross property,
plant, and equipment, listed on the balance sheet, to
capital expenditures. Next, subtract accumulated
depreciation. The result is the overall value of the
PP&E. It's often referred to as the company's book value.
4 KEY WHEN ACCOUNTING
FOR PP&E
 INITIAL DEPRECIATION REVALUATION RECOGNITION
RECOGNITION (DISPOSAL)
At initial recognition,
Depreciable amount is A revaluation is a Recognition is the
an entity measures a
the cost of an asset, or calculated upward recordation of a
financial asset or a
other amount adjustment to a business transaction in
financial liability at its
substituted for cost, country's official an entity's accounting
fair value plus or records. For example, a
less its residual value. exchange rate relative
minus, in the case of a loss can be recognized
Depreciation is the to a chosen baseline,
financial asset or a on a lower of cost or
systematic allocation of such as wage rates,
financial liability not at market analysis,
the depreciable amount the price of gold, or a
fair value through thereby recording the
of an asset over its foreign currency. In a
profit or loss, loss in the accounting
useful life. fixed exchange rate
transaction costs that records.
regime, only a
are directly
country's government,
attributable to the
such as its central
acquisition or issue of
bank, can change the
the financial asset .
official value of the
currency.