What Is A Plant Asset & Why It Is Important In A Business

What Is A Plant Asset

These assets are used for commercial processes such as workshops and factories. These assets are classified as fixed assets which include vehicles, office equipment, land, and other physical assets. In this article, we will briefly discuss the plant assets and their examples along with their importance in a business.

What Are Plant Assets

Plant assets are fixed assets that are used in a business for making finished goods. The assets are used in a business for at least one year or more. Their cost is capitalized and recorded in the balance sheet as fixed assets.

Plant assets are depreciated and impaired as well over their useful life except the land because it has an infinite life, so land cannot be depreciated.

Plant assets are presented in the balance sheet under the heading of long-term assets/non-current assets as PPE (Property, Plant, and Equipment). The accumulated depreciation is also mentioned in the balance sheet under the PPE account.

What Are The Examples Of Plant Assets

The following are the most common examples of plant assets:

  1. Land
  2. Building
  3. Machinery
  4. Vehicles
  5. Furniture
  6. Computer
  7. Storage Tanks
  8. Manufacturing plants
  9. Power generator
  10. Solar panels
  11. Wind turbines
  12. Water treatment plants
  13. Telecommunication towers
  14. Oil rigs
  15.  Medical equipment
  16. Retail store fixtures
  17. Fitting and fixture
  18. Office Supplies
  19. Table
  20. Land improvement
  21. Leasehold improvements
  22. Chairs, etc.

Why Plant Assets Are Important In A Business

Plant assets play a vital role in a business, following are the most important reasons why plant assets are important in a business:

importance of plant assets
What Is A Plant Asset
  • Plant assets help a business to increase the efficiency in the business operations
  • These assets provide long-term investment opportunities that contribute to the future growth of the business
  • These assets are the primary sources of revenue generation because these help in the production
  • Good quality plants assets reduce the cost by increasing efficiency and productivity
  • Plants assets play an essential role in making quality products
  • These assets help a business to spread and expand its brand by production capacity
  • Plant assets help a business in reducing the tax by depreciating assets
  • Getting a loan can be easy when a company has enough plant assets, etc.

Overall plant assets are the backbone of a business and it contributes well to the future growth of the business. These assets help a business to increase efficiency and ability to get long-term goals.

Preserving the plant assets can help a business to remain productive and a strong competitor in the market.


Are fixed assets the same as plant assets?

Usually, these both terms are used to describe the same concept. Both terms represent the long-term assets that are used in the business’s day-to-day operations, especially for production purposes.

Are the sales of plant assets recorded in the sales account?

If a business sells its plant assets then it must be debited its cash balance. If an asset receives more cash than its carrying value then gain on disposal is also recorded in the financial statements but if an asset receives less cash than its carrying amount then loss on disposal should be recorded.

Why is it not appropriate to report the plant assets at their liquidation value on the balance sheet?

The liquidation value of an asset is generally lower than market value or historical cost which can overstate the value of assets in the balance sheet of a company.

What are the major categories of plant assets?

Land, buildings, equipment, and improvements are the major examples of plant assets

Is cash a plant asset?

No, cash is a short-term economic resource or a current asset for a business.

Are plant assets tangible or intangible?

Plant assets are directly related to production, so they are tangible assets.

Is equipment a plant asset?

Equipment is a plant asset.

Is inventory a plant asset?

Inventories are not included in plant assets because they are current assets for a business.

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