Property, Plant and Equipment

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Property, Plant and Equipment

PPE's are tangible assets that are held for use in production or supply of goods or services, for rental to others, or for administrative purposes, and are expected to be used for more than one period.

Characteristics:

Tangible Assets - it has physical substance.

Used in Business - for production or supply of goods or services, for rentals to others, or for administrative purposes.

More than one period - It is expected to be used on a long-term basis.

Examples:

*Land *Office Equipment *Motor Vehicle *Land Improvements *Building *Machinery

*Ship *Aircraft *Furniture & Fixtures *Patterns, Molds & Dies *Tools *Bearer Plants

Recognition and Measurement at Recognition

It is recognized as an asset when:

*It is probable that future economic benefits associated with the asset will flow to the entity.

*The cost of the asset can be measured reliably.

Measurement at recognition:

*Measured at cost

*Cost- is the amount of cash or cash equivalent paid and the fair value of the other consideration given to acquire an asset at the time of acquisition or construction.