PP&E otherwise known as Property, Plant and Equipment is a term used to define the fixed asset in a company. This is considered to be an asset that is not easily converted into cash in the case of liquidation. When starting a business, to purchase a Fixed Asset Inventory California, capital expenditures are required. These are not part of the operating expenditures such as supplies or service contracts for phones and other equipment.
A good rule of thumb to determine if an asset is fixed is in its price tag. Typically speaking anything over $500 and that can be appreciated over a two year time period can be considered a fixed asset. In a business plan, the funds that are needed to buy anything from the PP&E category is listed under Capital Equipment Fund. Sometimes, when it comes to business partners, this is an easy fundraiser to get money into the fund to purchase equipment.
Part of the Capital Equipment Fund is a category to determine price points for selling, trading or retiring a fixed asset. Retiring means that the equipment is no longer useful for the business. If a price is obtained for selling, this must be contributed to the fund. A trade or sale of an asset is recorded in the same way expect that the replacement item is added to the fund.
There are two separate reports that are commonly used for tracking fixed assets. One is called the Asset Master/Detail Report. This is where all of the information for the asset is located. Everything from the date of purchase, description, original price, model numbers, present value and where it is located, its present job details, who uses it and its output. These reports are used in any number of reports and can be sorted for every department.
Another report is the Depreciation Projection Report. For preparing any kind of budget, the projection report is used for current and future years depreciation. It can be used to help budget effectively as well as determine the useful life of equipment and the replacement cost value. Since the purchase of PP&E is handled apart from normal operating procedures, special accounting practices must be used for fixed assets.
