Finimpact

Conclusion

If you know that equipment is a noncurrent asset, you’ll be able to account for it correctly on a balance sheet. This can ensure you’re well informed of how your business is doing financially.

It can also give you the insight that will allow you to improve your efficiency and increase your bottom line. In the event you need help classifying equipment or want to ensure your balance sheet is accurate, reach out to a CPA or other accounting professional.

Now that you know how to classify equipment purchased by your company, you might like to learn more about equipment financing loans.

Best Equipment Financing Companies

FAQ

Is property plant and equipment a current asset?
Often referred to as PP&E, property, plants, and equipment are not current assets as current assets are short-term assets with a lifespan of one year. Since PP&E are expected to have a useful life of more than a year, they’re noncurrent or fixed assets.
If I buy and sell equipment, is it still considered a noncurrent asset?
When you buy and sell equipment, you’re engaging in a business activity. Your equipment will act as inventory and transition from a noncurrent asset to a current asset.
Is equipment on the balance sheet?
Yes, you will include equipment on a balance sheet. It should be listed under the “noncurrent assets” category. Once it is, it will be added to the “current assets” category and used in the calculation of “total assets.”
Is equipment a liability or an asset?
Equipment can be considered a liability and an asset. If you take out a loan to purchase your equipment, it’s a liability. On the other hand, if you use your equipment to increase sales, it’s an asset.

About the Authors

Anna Baluch

Written by: Anna Baluch

Personal Finance Writer

Freelance copywriter who enjoys writing for large publications as well as startups, small to medium sized businesses.

More about me
Kal Salem

Reviewed by: Kal Salem

CPA, PMP and Finance Consultant

A CPA and finance professional working with small businesses to educate owners and grow alongside their businesses. Kal started his career in public accounting supporting SEC, regulatory, and both internal and external audits. He holds a Masters in Accounting and a BS in Supply Chain Management. Owner at Salem CPA Services LLC.

More about me
Somer G. Anderson

Fact checked by: Somer G. Anderson Ph.D., CPA

Accounting and Finance Professor

Somer G. Anderson has been working in the Accounting and Finance industries for over 20 years as a financial statement auditor, a finance manager in a large healthcare organization, and a Finance and Accounting professor at Maryville University.

More about me

Related Articles