Plant and equipment refers to the tangible assets that are used in the daily operations of a business to manufacture goods, provide services, or carry out various other activities necessary for its functioning. This term usually encompasses a wide range of items, such as machinery, tools, vehicles, fixtures, and furniture, that are essential for the production process or for supporting the organization's overall operations.
Machinery and equipment, which are typically classified as plant assets, are frequently used in manufacturing settings to transform raw materials into finished products. These assets can include items like conveyor belts, production lines, cranes, and specialized machinery specific to the industry. Additionally, equipment for research and development purposes, such as computers, laboratory apparatus, and testing instruments, can also fall under this category.
Plant and equipment also encompass assets used in service-oriented sectors, such as offices, retail outlets, and restaurants. These assets may include office chairs and desks, cash registers, computer systems, display racks, ovens, and refrigeration units, among others.
The value of plant and equipment is often significant, and they are considered long-term assets as they are expected to be used by the business over an extended period of time, usually beyond a year. These assets are reported on the company's balance sheet and are subject to depreciation, as their value gradually decreases over time due to wear and tear, obsolescence, or technological advancements.
