Property, Plant, and Equipment (PP&E) refers to a company’s long-term tangible assets that are used in the production of goods and services. These assets are essential to business operations and are not intended for resale. PP&E typically includes land, buildings, machinery, vehicles, and equipment.

These assets are recorded on the company’s balance sheet at their initial cost, which includes the purchase price plus any costs necessary to get the asset ready for use (e.g., transportation, installation, and setup fees). Over time, most PP&E assets—except land—are subject to depreciation, which systematically reduces their book value to reflect wear and tear or obsolescence.

Proper accounting for PP&E is important for accurately reflecting a company’s financial position. Businesses must also regularly assess for impairment, which occurs when an asset’s market value drops below its book value.

PP&E investments are often seen as indicators of a company’s growth potential and operational capacity. Capital-intensive industries like manufacturing, transportation, and energy typically have significant PP&E holdings.

In summary, PP&E represents the physical backbone of many businesses, supporting production and service delivery. Managing these assets effectively is key to maintaining efficiency, profitability, and long-term value.