Fixed assets, commonly referred to as property, plant, and equipment (PP&E), are long-term tangible assets that are employed in the creation or provision of goods and services, as well as for administrative or rental purposes. They are important resources for many firms and are essential to how they operate.

The following information relates to property, plant and equipment:-

PP&E Definition and Types :

Property : Property includes the land and any additionals to it, such as structures.

Plant : Any machinery, tools, or vehicles employed in operations or production.

Equipment : Equipment includes the tools,furnishings, and fixtures utilized in various commercial operations.

These assets are not interested for sale in the normal course of business and are anticipated to be employed for more than one accounting period.

Identification and Evaluation :

When PP&E  satisfies particular recognition requirements, such as being likely that future economic benefits would be gained from the asset, it is recorded as an asset on the balance-sheet.

PP&E is first recoreded at cost, which includes the purchase price, shipping, installation, and any other costs that are directly linked to getting the asset ready for use.

Amortization and Depreciation :

The systematic distribution of the cost of tangible assets over their anticipated useful lives is known as depreciation. It displays the asset's utilization obsolence, and wear and tear.

Similar to depreciation, amortization is used for intangible assets alone.

Depreciation can be calculated in a variety of ways including straight-line falling balance and units of production.

Impairment : 

When an asset's carrying value exceeds its recoverable value, which is the higher of the asset's fair value less selling expenses or its value in use, impairment results.

An asset's carrying amount is decreased to its recoverable amount if it is impaired and an impairment loss is recorded in the income statement.

Get rid of PP&E :

A corporation records any gain or loss on the disposal of a fixed asset when it decides to sell it.

By comparing the profits from disposal with the carrying amount of the asset at the time of disposal, the gain or loss is determined.

Disclosures :

Regarding the nature, carrying amounts, and changes in PP&E, companies must make thorough disclosures in their financial statements.

Information on usable lifetimes, depreciation methodologies, and any obligations or restrictions pertaining to these assets are also provided.

The value and function of PP&E :

Many firms make a sizable investment in PP&E since it is necessary to run their operations.

These resoures give businesses the ability to produce goods, offer services, and make money.

To ensure effective asset utilization, maintenance, and replacement, proper PP&E management is essential.

For accurate and current information on property, plant, and equipment, particular legislation and guidelines should be examined. It is significant to remember that according standards and practices may differ among jurisdictions.