In many cases, the terms what is a plant asset and what is a fixed asset are used interchangeably. However, these terms have different meaning to different people, depending on their business and financial needs. The following explanation of what is a plant asset and what is a fixed asset should be helpful to understand the meaning of both terms.
Fixed assets, also called fixed assets, are items of physical property which cannot be easily changed to cash and are usually lasting. Examples include plant materials, machinery, buildings and real estate. Fixed assets include materials and supplies, automobiles, furniture, houses, buildings, land and structures. Fixed assets do not necessarily need to be used daily, but they are a necessity for any business, since they cannot be stored or moved from one place to another. They also cannot be destroyed, borrowed or lent.
An inventory of fixed assets usually takes the form of a plant inventory, which records plant inventory data over time. It also takes into account the number of hours that the plant is closed down while undergoing repairs. Inventory also takes into account the amount of inventory that was on-hand when the plant closed down.
A manufacturing plant is said to have on-hand inventory when there are enough employees and materials on hand to manufacture the needed inventory. When a plant is closed down, it loses its ability to produce necessary raw materials and finished products. In this case, the plant stock must be replaced. Inventory rating, or the performance of the plant stock as a whole, is an important gauge of the plant’s ability to perform given current conditions. Inventory rating is based on three factors, plant specifications, average production capacity and age of the plant stock.
The other two factors, the age of the plant stock and its manufacturing capacity, are more subjective. Often a company’s plans about what is a plant asset will change as circumstances change. This is why a company may decide to shut a facility if it is no longer necessary to operate the facility in question. There are many different types of fixed assets that companies use to track their plant inventory, including plant materials, fixed plant inventories, fixed plant stock, fixed assets held by the company and total plant assets.
A company also has to consider what is a plant asset according to its own unique circumstances. For instance, a plant that manufactures a product that must be shipped to distributors may need to consider shipping costs when determining what is a plant asset. Likewise, a plant that specializes in producing components for other businesses may need to consider the cost of purchasing these components when determining what is a plant asset. These are just some of the situations that have to be considered when considering what is a plant asset.
A key part of what is a plant asset is its inventory rating. Inventory rating is often referred to as the POT or PTR of a plant. The POT of a plant is a measure of its overall value and performance. A higher POT means the plant has greater value and a lower market price for that plant’s inventory. Many companies base their what is a plant asset analysis on the POT of a plant.
Another important factor to consider when determining what is a plant asset is the cost of maintaining those assets. Plants tend to depreciate in value over time. This is especially true for the older plants that were built before 1977. Depreciation is also a significant factor to keep in mind when determining what is a plant asset. Because many plants today tend to experience more wear and tear than in years past, keeping this in mind can give companies a good indication of the overall value of their assets.