Question

1. What are the 3 characteristics of an entity's property, plant, and equipment (PPE)?
2. Provide an example of PPE for a company.
3. What does “capitalize” mean?
4. This is the capitalization criteria for a company's PPE: Capitalize all costs ________________ to get the asset ready for its ____________________ ____________________ .
5. Of all the PPE types, which one is not depreciated?

Answer 1

Examples of PPE include such items as gloves, foot and eye protection, protective hearing devices (earplugs, muffs) hard hats, respirators and full body suits. Understand the types of PPE. Know the basics of conducting a “hazard assessment” of the workplace. Select appropriate PPE for a variety of circumstances.

To capitalize is to record a cost or expense on the balance sheet for the purposes of delaying full recognition of the expense. In general, capitalizing expenses is beneficial as companies acquiring new assets with long-term lifespans can amortize or depreciate the costs.