Long-lived tangible operating assets such as land, buildings, machinery, and equipment used across multiple periods.
Property, plant, and equipment, often shortened to PP&E, means the long-lived tangible assets a business uses in operations over more than one period. Common examples include land, buildings, machinery, vehicles, and equipment.
PP&E often represents a major share of invested capital. It drives depreciation expense, maintenance decisions, capital expenditure planning, and impairment risk, so it matters both for accounting and for operating analysis.
PP&E is usually recorded initially at cost, including amounts directly attributable to getting the asset ready for use. After recognition, the asset is carried through a combination of historical cost, accumulated depreciation, and any impairment adjustments, subject to the reporting framework.
Land is commonly separated because it is not usually depreciated, while buildings and equipment normally are. In everyday practice, many people casually call these balances fixed assets, but PP&E is the more precise label for tangible operating assets.
A company buys production equipment for 150,000 in cash:
| Account | Debit | Credit |
|---|---|---|
| Property, Plant, and Equipment | 150,000 | |
| Cash | 150,000 |
The equipment then remains in PP&E and is depreciated over its useful life.
PP&E is not the same as inventory, which is held for sale, and it is not the same as intangible assets such as patents or goodwill. It also is not just one account, but a reporting class that can include several asset accounts.