Tools and Equipment Examples in Accounting Equipment refers to tools that are required for accounting. Equipment refers to the computers, office machines, and computer aids that are used in accounting. Financial accounting is a branch of accounting that extends job performance expectations to include service users like investors, creditors, and other people who use financial information for decision-making. List of examples of tools and equipment. Printing Press (Equipment). Manufacturing firms use printing presses and computer printers to print materials, such as newspapers.
Tools and Equipment are items that furnish or support the production or delivery of goods and services. For example, forklift truck, bench grinder, saws, computer etc.
What is Equipment?
Definition: An asset that is used in a company’s business operations. It is reported under the line item Property, Plant, and Equipment on the long-term balance sheet.
What does Equipment mean?
What’s the definition of equipment? A piece of equipment is an investment made by a company to accomplish a particular task. It could be a drill press in a machine workshop or a car lift in an repair shop. Other examples are machinery, hand- and power tools, as well as technical apparatus. These assets are not considered liquid assets as they are difficult long-term in nature and hard to sell or convert to cash.
How can companies account for this? It’s capitalized when equipment is purchased and put in service. Instead of being expensed immediately. These assets are long-term, tangible assets that can provide benefits over a longer time period. This is logical. The useful lifetime of equipment depreciates the cost of these assets.
Exemple
Imagine a large corporation has a large facility that houses several buildings. The employees also have a large parking area where they can park their cars. They have several employees who manage the facility, including the parking lot. This company is large. The manager of the facilities department must purchase three snowblowers to make sure his employees can clear the parking lot. The facilities manager buys three snow blowers at $3,000 each ($1,000 each) and puts them in service. The snow blowers are expected to be used for five-years, and the accounting department is informed of all documentation.
Accounting will compile all supporting documentation and create a journal entry to capitalize the snow blowers. This journal entry will debit the equipment account and credit the cash account.
To properly allocate each snow blower’s cost over its useful life, the accounting department will book the depreciation expenses entries each month. The monthly depreciation expense will be $50 or ($3,000 cost/5 years/12 months).
Equipment can be described as any instrument that is used to produce any product, machine, or service. They are designed to perform specific tasks. They are usually purchased for a long time. Equipment is a part of fixed assets. Equipment is subject to a certain rate of depreciation. To show its actual written down value in books. Other names of equipment may be used, such as implement, tool, or apparatus. Machine and equipment are very similar. While each machine has its own way of doing any job, equipment is a tool that can be used to make or repair large machines. We keep all equipment separate in fixed assets.
1. Financial Calculator
A financial computer performs the financial functions that are commonly required in commerce and business communities.
2. Computer printer
To print accounting reports.
3. Accounting Software
To record, save and analyze transactions.
4. Photocopiers
Photocopy any accounting report original.
5. Equipment with a unit record
To record the units. This equipment is not used.
6. Equipment for measuring units
To measure inventory units.
7. Other
Based on the needs of accounting work
What are examples of fixed assets?
Items that are expected to be of benefit to the buying organization for more than one reporting period are called fixed assets. These items are kept in fixed asset accounts when they are acquired. These items are divided into different accounts based on their characteristics for accounting purposes. Here are some examples of fixed asset accounts.
- Buildings. All facilities owned by the entity.
- Computer equipment. This includes all types of computer equipment such as servers, desktop computers and laptops.
- Software. The most expensive software is usually included; any other software are added at the expense of the user.
- Construction is in progress. This account is used to record the construction costs. The balance is transferred to the appropriate fixed asset account once an asset, usually a building, is finished.
- Furniture and fixtures. This includes tables, chairs and filing cabinets.
- Intangible assets. All nontangible assets include radio licenses and patent costs.
- Land. This includes the purchase cost of land and the cost of improvements to the land (which is otherwise recorded in a separate account).
- Leasehold improvements. This includes the cost of renovating leased space.
- Machinery. This term is usually used to refer to production machinery.
- Office equipment. This includes copiers and other administrative equipment. However, computers are not included (for which a separate account is required).
- Vehicles. This includes company cars, trucks and other specialized moving equipment such as forklifts.
Conclusion
An item that can be used to help or perform the activities of an organization. Computers, calculators and fire extinguishers are all examples of tools and equipment used in accounting. When equipment is put into service, it can be depreciated. It usually takes one year to determine if an item of equipment is still useful for its intended purpose. Equipment’s original cost is the basis of depreciation.