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Financial Statement Presentation of Property, plant, and equipment (PPE)
Most balance sheets contain only one line item for property, plant, and equipment. This line shows the book value of all fixed assets. Notes to the financial statements contain more detailed information.
Figure 6.3 contains a partial balance sheet for OshKosh B’Gosh, Inc. (OB), which contains the conventional one-line presentation. Figure 6.3 also contains excerpts from OB’s notes. Note 1 indicates that OB uses straight-line depreciation and also discloses OB’s estimates of its assets’ useful lives. By comparing these estimates to industry norms, analysts can ascertain if a firm is overstating its earnings by selecting useful life estimates that are unduly long. Such estimates understate depreciation expense and overstate net income.
Figure 6.3 - Partial Balance Sheet and Related Notes
A breakdown of OB’s property, plant, and equipment is provided in figure 6.3. It discloses the cost of the major types of fixed assets as well as accumulated depreciation. Notice that the differences between cost and accumulated depreciation agrees with the amounts appearing on the balance sheet.
Property, Plant, and Equipment (PPE) Topics
- Property, Plant and Equipment (PPE)
- Initial Valuation of Property, plant, and equipment (PPE)
- Depreciation of Property, plant, and equipment (PPE)
- Expenditures After Acquisition - Property, plant, and equipment (PPE)
- Disposals of Property, plant, and equipment (PPE)
- Write-Downs - Property, plant, and equipment (PPE)
- Financial Statement Presentation of Property, plant, and equipment (PPE)
- Utilization of Property, plant, and equipment (PPE)
- Percentage of PPE Depreciated (Age)
- Evaluation of the Accounting for Property, Plant, and Equipment (PPE)
Related Noncurrent Assets Topics
