Plant Assets: Definition & Accounting Issues

An error occurred trying to load this video.

Try refreshing the page, or contact customer support.

Coming up next: Applying the Cost Principle to Compute Plant Assets

You're on a roll. Keep up the good work!

Take Quiz Watch Next Lesson
Your next lesson will play in 10 seconds
  • 0:04 What Is a Plant Asset?
  • 0:52 Examples of Plant Assets
  • 1:51 How to Account for…
  • 2:41 Lesson Summary
Save Save Save

Want to watch this again later?

Log in or sign up to add this lesson to a Custom Course.

Log in or Sign up

Speed Speed
Lesson Transcript
Instructor: Kevin Newton

Kevin has edited encyclopedias, taught middle and high school history, and has a master's degree in Islamic law.

Companies have a number of different types of assets that they have to keep track of. In this lesson, we'll see how companies account for plant assets, which ranges from construction sites to delivery trucks.

What Is a Plant Asset?

Are you at work? Good. Look around your company. Chances are, you see plenty of people. Now, snap your fingers and make them disappear! In fact, go ahead and snap your fingers again to make all the raw materials disappear, and once more to make the electricity that powers your machinery go away (feel free to leave the lights on, however!).

What you're left with are all the machines, land, equipment, and buildings used to produce your goods. In short, these are called plant assets. Technically speaking, anything that is used to make money that has both a useful life of more than a year and doesn't directly become part of the product itself is a plant asset. In this lesson, we'll look at examples of plant assets, as well how accounting for them requires special attention.

Examples of Plant Assets

Like I said earlier, if you take a look around your company and remove all of the people and raw materials, you'll have a pretty good idea of what plant assets consist of. Specifically, these assets include all the machines, computers, buildings, and even land owned and used by the company.

However, it's not only these physical items that you can touch. Let's say that you have an agreement to rent a location but as part of the lease agreement, you can make improvements as you see fit to carry out your business, an arrangement called a leasehold improvement agreement. Unless the lease expires (which would cause the ownership of said improvements to revert to the owner of the building), you get to count those improvements towards your plant assets as well.

In fact, even sites that are currently under construction for your company can be considered plant assets. In other words, there are quite a number of categories to which the term 'plant asset' could apply. Which brings us to the question: How are plant assets accounted for?

To unlock this lesson you must be a Member.
Create your account

Register to view this lesson

Are you a student or a teacher?

Unlock Your Education

See for yourself why 30 million people use

Become a member and start learning now.
Become a Member  Back
What teachers are saying about
Try it risk-free for 30 days

Earning College Credit

Did you know… We have over 200 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.

To learn more, visit our Earning Credit Page

Transferring credit to the school of your choice

Not sure what college you want to attend yet? has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.

Create an account to start this course today
Try it risk-free for 30 days!
Create an account