Meaning and accounting
Property, plant and equipment are tangible items that a company uses in production, in providing services, in administration or for other purposes specified by the applicable standard, usually for more than one period. The category can include buildings, equipment and vehicles. Accounting depends on recognition, initial measurement and the subsequent accounting policy.
If a carrier buys a truck to deliver goods to customers, it uses the item to earn money over several years. The cost does not usually become an expense in full on the purchase date: it is allocated through depreciation if the item is depreciable. The seller may nevertheless be paid immediately.
Inventory and investor limits
Not every expensive item is property, plant and equipment. A car held by a dealership for resale will usually be inventory. For an investor, the age of equipment, capital expenditure, impairment and residual value matter. The carrying amount of property, plant and equipment is not necessarily the price that could be obtained on sale. Related reading: [inventory and depreciation](/guides/inventory-and-depreciation/), [amortization](/glossary/amortizaciya/) and [assets](/glossary/aktivy/).