What is the difference between plant and machinery?

What is the difference between plant and machinery?

Examples of machinery in a company

Property, plant and equipment is a component of the financial statements, in which are grouped those tangible assets that are used for the production of goods or the rendering of services, for leasing to third parties or for administrative purposes.

Investment property and property, plant and equipment are two different categories within assets; each has its own definition and should therefore be disclosed separately in the statement of financial position.

In the following video, Dr. Juan David Maya, an expert consultant on International Financial Reporting Standards, explains the main differences between investment property and property, plant and equipment:

Machinery and equipment of a company

Machinery, plant and equipment are assets owned by a company for use in the production or supply of goods and services, for leasing to third parties or for administrative purposes, and are expected to be used for more than one financial period.

Non-depreciable fixed assets are those that are not operating or are not generating income because at the date of presentation of the Balance Sheet they are still in the construction or assembly stage, for example:

They are those that due to deterioration caused by use, actions of natural factors, obsolescence due to technological advances, changes in the demand for goods and services to whose production or supply contribute to lose their value. For example, we have vehicles, computers, machinery, etc.

Exhaustible assets represent the natural resources controlled by the economic entity. Their quantity and value decrease in proportion and in a measurable manner with the extraction or removal of the product.

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Machinery and equipment accounting

Since the numerical flow of items between stations does not reveal the qualitative factors that may be decisive for the layout, a technique known as PSI (Systematic Layout Planning) or SLP (Systematic Layout Planning) is employed.) This involves developing a relationship diagram, showing the degree of importance of having each station adjacent to each other, or using CRAFT.

In line layout, equipment and workstations are arranged in sequence. In process layout, the objective is to simplify material handling and create normal routes that link the system with frequent material movement.

Property, plant and equipment examples

Machinery, plant and equipment are assets owned by a company for use in the production or supply of goods and services, for leasing to third parties or for administrative purposes, and are expected to be used for more than one financial period.

Non-depreciable fixed assets are those that are not operating or are not generating income because at the date of presentation of the Balance Sheet they are still in the construction or assembly stage, for example:

They are those that due to deterioration caused by use, actions of natural factors, obsolescence due to technological advances, changes in the demand for goods and services to whose production or supply contribute to lose their value. For example, we have vehicles, computers, machinery, etc.

Exhaustible assets represent the natural resources controlled by the economic entity. Their quantity and value decrease in proportion and in a measurable manner with the extraction or removal of the product.

What is the difference between plant and machinery?
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