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NonCurrent Assets

  1. Non-Current Assets
  2. PP&E
  3. Tangible Personal Property
  4. Capitalize
  5. FF&E

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FF&E (Furniture, Fixtures & Equipment): Definition & Importance

Updated: July 30, 2024

In every business, there are going to be things that are needed to operate successfully. They can be to help the business itself or provide employees what they need to do their jobs effectively.Ā 

So when you hear someone talk about different furniture, fixtures, and equipment, what does it actually mean? Keep reading to learn more about what furniture, fixtures, and equipment are in business. Weā€™ll cover the different types, why itā€™s important, and what doesnā€™t count.

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    KEY TAKEAWAYS

    • FF&E are movable interior items that contribute to the overall look, feel, and functionality of a space.
    • They can include furniture, artwork, window treatments, flooring, lighting, and more.
    • FF&E play an important role in the design of a space and can help create a certain atmosphere or ambiance.
    • When it comes to commercial spaces, FF&E can also be a significant investment.
    • Itā€™s important to carefully consider all aspects of your space before making any decisions about furniture, fixtures, and equipment.

    What Is Furniture, Fixtures, and Equipment (FF&E)?

    FF&E refers to the movable furniture, electronic equipment, and other physical items used in a business. But it’s important to make the distinction that it’s anything that isn’t a permanent fixture.

    Moreover, office supplies are not a part of FF&E. This includes pens, paper products, and similar items. If itā€™s something thatā€™s used in day-to-day business operations but is not of significant value, itā€™s not included in FF&E.

    It is also important to track and manage FF&E because it represents a significant portion of a company’s assets. Additionally, FF&E can depreciate for tax purposes.

    Furniture, fixtures, and equipment (FF&E) is not a one-size-fits-all accounting category. What you need to know about it depends on the type of business youā€™re operating and the financial reporting needs of your company.

    Read on to find out if you need more information about FF&E as it relates to your business. There are benefits to knowing how this financial category affects your balance sheet and income statement.

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    Why Is FF&E Important?

    FF&E is important because it represents a significant portion of a company’s assets. Additionally, FF&E can depreciate for tax purposes. Tracking and managing FF&E can help a company save money and make more informed decisions about its physical assets.

    There are two main reasons why itā€™s important to understand and track FF&E properly. First, it allows you to report accurate financial statements. And second, it helps you plan for future expenses.

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    Examples of FF&E

    Some common examples of FF&E might include any of the following items:

    • Furniture, fixtures, and equipment (desks, chairs, computers, etc.)
    • Tools and raw materials used to produce your products
    • Office furniture
    • Computers and electronic equipment
    • Kitchen appliances
    • Lighting fixtures
    • Materials and tools used in research and development (R&D)
    • Office supplies, vehicles, and other assets used to deliver your services

    Any intangible assets that you buy which might stay with the company if itā€™s acquired

    Letā€™s take a closer look at some of the examples above to see the differences between each.

    FF&E

    Furniture, computers, etc. that you use in the daily operations of your business should be in FF&E. These are the assets that are on the Balance Sheet. This means you record them as long-term assets. You use these assets over a long period of time, such as 5 years.

    You report these capital assets at their original cost. In some cases, the net present value of their cost using the companyā€™s cost of capital as a discount rate.

    The criteria for furniture aren’t the same for every industry. There’s a difference between furniture and fixtures, as well. Some furniture pieces might be a part of the company’s operations. But usually, movable office furniture is part of FF&E.

    The same goes for lobby furniture. You’ll need to account for every item of furniture in your accounting. Identifying all types of furniture will give you more accurate figures.

    Tools and Raw Materials

    Raw materials and manufacturing tools used throughout the life of the product, not when itā€™s manufactured, should be in FF&E.

    Manufacturing tools that are only used once and then replaced should be as a ā€œone-time expenseā€ on the income statement, not the Balance Sheet.

    Materials and Tools Used in R&D

    Raw materials and assets used in R&D of new products should be in FF&E.

    This may include scientistsā€™ salaries, lab and audiovisual equipment, testing materials, and so on.

    Certain factory equipment might also relate to this type of business equipment.

    Office Supplies, Vehicles, Assets

    Assets used to deliver your services should be in FF&E. These assets are on the Balance Sheet as short-term assets.

    Any intangible assets purchased that might stay with the company if itā€™s acquired.

    Any intangible assets, such as patents or copyrights, should be in FF&E. These are long-term assets on the Balance Sheet. Please note that FF&E is a separate line item.

    What Is Not Included in FF&E?

    FF&E does not include land or buildings. Additionally, FF&E does not include intangible assets such as trademarks or patents. Any immovable fixtures, such as built-in shelving, would also not be FF&E.

    Summary

    FF&E refers to the movable furniture, electronic equipment, paper products, and other physical items used in a business. It is important to track and manage FF&E because it represents a significant portion of a company’s assets. Additionally, FF&E can depreciate for tax purposes.

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    Jami Gong is a Chartered Professional Account and Financial System Consultant. She holds a Masters Degree in Professional Accounting from the University of New South Wales. Her areas of expertise include accounting system and enterprise resource planning implementations, as well as accounting business process improvement and workflow design. Jami has collaborated with clients large and small in the technology, financial, and post-secondary fields.

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    Written by Jami Gong, MPAcc, CPA

    Jami Gong is a Chartered Professional Account and Financial System Consultant. She holds a Masters Degree in Professional Accounting from the University of New South Wales. Her areas of expertise include accounting system and enterprise resource planning implementations, as well as accounting business process improvement and workflow design. Jami has collaborated with clients large and small in the technology, financial, and post-secondary fields.

    FAQs about FF&E

    What is the difference between FF&E and OS&E?

    OS&E stands for Operations, Services, and Equipment. OS&E includes all of the necessary supplies and equipment needed to keep a business running on a day-to-day basis. This would include items such as office supplies, janitorial supplies, and computer equipment.

    FF&E includes all of the movable furniture and equipment used in a business. This would include items such as office furniture, electronic equipment, and kitchen wares. But consumable products are not included.

    Is HVAC considered FF&E?

    No, HVAC is not considered FF&E. HVAC is a permanent fixture and is not included in FF&E.

    Is FF&E the same as PP&E?

    No, FF&E is not the same as PP&E. PP&E stands for property, plant, and equipment. PP&E includes all of the tangible assets used in a business, including both real property and FF&E.

    What is the difference between FF&E and real property?

    Real property refers to land or buildings owned by a business. FF&E includes all of the movable furniture, electronic equipment, paper products, and other physical items used in a business.

    Can you lease FF&E?

    Yes, you can lease FF&E. Leasing FF&E can be a good option for businesses that do not have the capital to purchase FF&E outright. It can also allow businesses to upgrade their FF&E more frequently than if they.

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