FAR, Financial Accounting and Reporting

Sources for Property, Plant, and Equipment

Last reviewed 2026-10-06

The standards and authorities behind PocketCPA's FAR lessons on Property, Plant, and Equipment. The topic rests on ASC 360.

About this topic

Property, plant, and equipment is what a business owns in order to use it, rather than in order to sell it.

Property, plant, and equipment (PP&E) is the machinery, buildings, land, vehicles, and equipment a business holds for use in operations rather than for resale. These long-lived tangible assets often dominate the balance sheet of a manufacturer, a utility, or a real estate operator.

Key points

Long-lived assets are tested for impairment when a triggering event occurs using a two-step process: recoverability test, then fair value measurement.
The recoverability test compares undiscounted future cash flows to carrying amount; if cash flows are less, the asset is impaired.
An asset held for sale is measured at the lower of carrying amount or fair value less cost to sell, and depreciation stops.
Interest is capitalized on qualifying assets during the construction period, limited to actual interest incurred.

What the lessons cover

Initial cost: what gets capitalized (ASC 360-10-30-1)
Capitalized interest during construction (ASC 835-20)
Depreciation: allocation, not valuation (ASC 360-10-35-4)
Impairment of assets held and used (ASC 360-10-35-17)
Long-lived assets held for sale (ASC 360-10-45-9)
Disposals and derecognition (ASC 360-10-40-5)
Asset retirement obligations (ASC 410-20)
Presentation and disclosure (ASC 360-10-45 and 360-10-50)

Authoritative references

ASC 360-10-30-1, the initial cost of property, plant, and equipment and what gets capitalized.
ASC 360-10-35-4 and 35-7, depreciation as allocation rather than valuation, applied to the beginning carrying amount without subtracting salvage value under the declining-balance approach.
ASC 360-10-35-17, impairment of assets held and used, in its two steps.
ASC 360-10-35-20, the reduced carrying amount as the new cost basis, with no restoration if value later recovers.
ASC 360-10-35-21, the events or changes in circumstances that suggest the carrying amount may not be recoverable.
ASC 360-10-35-23 through 35-28, the asset group, whose cash flows are largely independent of other assets and liabilities, and the allocation of the loss across its long-lived assets in proportion to carrying amounts.
ASC 360-10-35-38 through 35-40, a held-for-sale asset at the lower of carrying amount or fair value less cost to sell, with a gain recognized only up to losses previously recognized.
ASC 360-10-35-43 through 35-45, no depreciation while held for sale, and the return to held and used if the plan is abandoned.
ASC 360-10-35-47 through 35-49, abandonment as a disposal when the asset ceases to be used, and an idled asset that is not accounted for as abandoned.
ASC 360-10-40-5, disposals and derecognition.
ASC 360-10-45-4 and 45-5, presentation of an impairment loss in income from continuing operations before income taxes, including a loss that is not part of a discontinued operation.
ASC 360-10-45-9 and 45-14, long-lived assets held for sale, presented separately, with their assets and liabilities not offset.
ASC 360-10-50-1, 50-2 and 50-3, disclosure of depreciation, of a recognized impairment, and of an asset or disposal group sold or held for sale that is not a discontinued operation.
ASC 360-10-55-37 through 55-41, the illustration of the availability criterion for held for sale.

How PocketCPA uses these sources

Every lesson is written in original words and cites the paragraph each rule comes from. No standard's text is reproduced. How lessons and questions are written and checked is set out in our methodology.