What are the characteristics of plant assets? Before explaining the traits of these type of assets, lets define the term Plant assets. According to an accounting source Wiley, Plant assets are resources with three key main characteristics. They have a definite shape, secondly all plant assets have physical appearance and depreciate except for land. Main types of plant assets in the world, namely include Land, Equipment, Property and Building.
7 Key Characteristics of Plant Assets
When talking about plant assets and there characteristics. Its important to remember key example of plant assets include; cars, buildings, machinery, equipment etc. Plant assets are not inventory because they are intended for day to day operations of the business through out its life. They are not for sale but be deposed off after having depreciated, when the company wishes to liquidate assets.
1.Plant assets play a key role in the ongoing operations of the business
These are assets any business needs to carryout its daily activities effectively. Plan assets include motor vehicle for transporting goods, buildings, and machines, such as printers and computers.
2. Plan Assets Depreciate
Another major characteristic is that these assets. Depreciate over time through out its useful life. Depreciation refers to the cost allocation of an asset to expense through its useful life.
3. Plant Assets Expand productive Resources
Plan assets increase production and business activities. Through unity of activity, plant assets such as machinery can be measured the level of output produced in production. People are important as human resource and especially management.But the output levels of people can not be compared to machines. Most companies buy plant assets to boos and increase productivity and also for efficiency purposes.
4. Every Company Needs Plant Assets
The fourth characteristic is that these have helped so many companies. No company can work effectively without plant assets. And statistics show over a million companies rely and utilize plant assets. Southwest Airlines alone has invested over 80 percent of there investments in plant assets.
5. Plant Assets Have a Cost And Purchase Price
Key characteristic includes that plant assets have purchase price. This can be freight costs paid by the purchaser to move equipment from the point of sale to destination. Sales tax which is also considered as part of the total plant assets expenditure and installation costs
6. Plant Assets Are Tangible
They have physical appearance and can be touched, improved and depreciated. key example of plant assets include; cars, buildings, machinery, equipment etc.
7. Limited Life Span
Plant assets depreciate hence due to that they can not live forever. This is a more reason companies estimated accumulated depreciation from the time of purchase and depreciation expense to know cost of maintaining the asset per year. Theoretically the more an assets is used, the it becomes an expense and wears out.