Is Equipment An Asset Or A Liability In Accounting
Equipment is the asset that helps a business to produce goods. These include machinery, tools, vehicles, computers, and other tangible resources. These assets help a business in increasing its productivity, efficiency, and capacity to produce more goods in a short time.
Is Equipment An Asset
Equipment is treated as an asset in accounting terms and classified as a fixed or non-current asset in the statement of financial position.
Equipment is classified as a fixed or non-current asset because it is occupied in a business for a long time and its usage and life extend more than one year.
Must remember if equipment falls below the capitalization limit then it is classified as an expense when it is incurred. Capitalization is the policy of a company that states when an expenditure is capitalized and when it is recorded as an expense.
When Equipment In A Business Becomes Current Assets
If a business revenue comes from the purchase and sales of equipment which is the primary source for a business then equipment is classified as inventory which is a current asset.
For example, if a business is based on purchasing and selling of stationary then stationary is classified as an inventory in the balance sheet of the company.
Examples Of Equipment
The following are the most common examples of equipment in a business.
- Computer
- Printer
- Projectors
- Switches
- Cash register
- Router
- Telephones
- Fax machine
- Calculators
- Office furniture
- Time clocks
- Presentation Board
- Microphones and speakers, etc.
FAQs
Is equipment a current asset?
Equipment is classified as a non-current asset because it has a long life and it is not easily liquidated. If equipment is expected to sale within the business cycle, it is still classified as a non-current asset rather than a current asset in the balance sheet.
Is equipment an asset or an expense?
Equipment can be an expense if the cost of equipment falls below the capitalization limit.
Is equipment an asset account?
Yes, equipment is a fixed asset account.
Is equipment an asset or a liability?
Equipment is a long-term asset.
Is equipment an asset or equity?
Equipment is not equity because these are classified as assets in the balance sheet.
Is equipment an asset on a balance sheet?
Yes, equipment is recorded as a fixed asset in the balance sheet.
Is equipment a long-term or current asset?
Equipment is a long-term asset but it can be a current asset if a business is only based on purchasing and selling equipment.
Why is equipment a long-term asset?
Because it is not expected to sell within a year.
Does equipment are depreciated?
Since the equipment is considered a fixed asset, its value slowly reduces and reflects the wear and tear cost. So yes equipment is depreciated over its useful life.