property, plant, and equipment
/ PP-and-E /
Picture a bakery. Some things it owns get used up fast — the flour, the paper bags, the electricity. But other things stick around for years and do the heavy lifting day after day: the building, the big industrial oven, the delivery van, the mixing machines. You do not buy a new oven every morning; you buy it once and it keeps working for a decade. Those long-lasting, physical, work-doing things are what accountants call property, plant, and equipment.
Property, plant, and equipment (PP&E) are tangible assets a business holds to use in its operations — not to resell — and that are expected to provide benefit for more than one year. The usual members of the family are land, buildings, machinery, equipment, vehicles, furniture, and fixtures. They are recorded on the balance sheet at their cost, and because they wear out and grow obsolete, most of them (land is the famous exception) are gradually charged to expense over their useful life through depreciation. So on the balance sheet you typically see the original cost, less accumulated depreciation, leaving a net book value.
PP&E matters because for many companies — factories, airlines, hotels, utilities — it is the single biggest thing they own and the engine of how they make money. It also shapes the financial statements heavily: the choice to capitalize a purchase as PP&E (rather than expense it immediately) spreads its cost over many years, smoothing reported profit. A common confusion is to call any expensive purchase a fixed asset; what makes something PP&E is not its price but that it is tangible, used in operations, and lasts beyond a year.
A printing shop buys a press for 200,000 and expects to use it for 10 years. The press is PP&E: it sits on the balance sheet at 200,000, and each year a slice of that cost is recorded as depreciation expense. The ink and paper the shop buys, by contrast, are not PP&E — they get used up quickly and are expensed (or counted as inventory) instead.
The press lasts years and earns income — that is what makes it PP&E, not its price tag.
Goods a company buys to resell are inventory, not PP&E — even the very same model of computer is inventory for the store selling it but PP&E for the office using it. The use, not the object, decides the category.