Net PP&E (Property, Plant & Equipment)

Category

Balance Sheet

Units

Currency

US-GAAP elements

PropertyPlantAndEquipmentNetAccumulatedDepreciationDepletionAndAmortizationPropertyPlantAndEquipment

Reference

Regulation S-X Rule 5-02.13 (Property, plant and equipment); Rule 5-02.14 (Accumulated depreciation); ASC 360

Source

Reported in SEC EDGAR filings (US-GAAP XBRL taxonomy)

Property, plant and equipment, net (net PP&E), is the carrying value of a company's long-lived physical operating assets after subtracting the depreciation, depletion, and amortization accumulated since they were acquired. It covers assets such as land, buildings, machinery, equipment, and construction in progress that the company uses to produce goods and services rather than to sell.

Net PP&E is the figure most balance sheets show on the face of the statement. It represents the portion of the assets' original cost that has not yet been expensed.

Regulation S-X Rule 5-02.13 requires companies to report property, plant and equipment and the basis for measuring it, and Rule 5-02.14 requires the accumulated depreciation to be shown separately, on the balance sheet or in a note. The net figure is tagged PropertyPlantAndEquipmentNet in XBRL, and the accumulated amount is AccumulatedDepreciationDepletionAndAmortizationPropertyPlantAndEquipment. Measurement follows ASC 360: assets are carried at historical cost less depreciation, and are written down if an impairment test shows the carrying amount cannot be recovered.

Net PP&E is an accounting value, not a market value. Land bought decades ago stays at its old cost, and fully depreciated equipment can still be in productive use at a carrying value of zero. Differences in depreciation methods and useful-life estimates also make net PP&E less comparable across companies. Presentation of leased assets varies as well: some filers include finance lease right-of-use assets in PP&E, while operating lease right-of-use assets are usually shown on a separate line.

The balance moves each period with capital expenditures, depreciation, disposals, impairments, and acquisitions. Analysts use it to judge capital intensity, for example by comparing revenue with net PP&E as a fixed-asset turnover ratio, and to check whether capital spending is keeping pace with depreciation. A net PP&E balance that shrinks year after year while the business grows can indicate underinvestment.