Does equipment go on the income statement?

What is equipment in accounting?

In accounting, equipment refers to tangible, long-term assets used in business operations, such as machinery, tools, computers, or vehicles. Because equipment typically benefits multiple accounting periods, it’s capitalized as an asset rather than treated as a one-time expense. The value of this asset is then reduced each year through depreciation to reflect wear and usage.

How to categorize equipment

• Record equipment purchases as Fixed Assets on the balance sheet, not as immediate expenses.
• Use a “Property, Plant, and Equipment (PP&E)” or “Machinery and Equipment” account in your chart of accounts.
• Apply depreciation to spread the equipment’s cost over its useful life (commonly 3–10 years).
• Only record depreciation expense on the income statement—not the original purchase cost.
• For smaller tools or short-lived items below your capitalization threshold, record as Supplies or Small Equipment Expense.
• Keep detailed records of purchase price, date, and serial numbers for depreciation tracking.

Examples of equipment

• Manufacturing machinery or production tools.
• Office computers, printers, and copiers.
• Company vehicles or delivery trucks.
• Medical, lab, or testing equipment.
• Construction or maintenance tools.
• Commercial kitchen or restaurant equipment.

Tax implications for equipment

• Equipment is a capital asset that must be depreciated over time rather than expensed immediately.
• Under Section 179 and bonus depreciation, businesses can deduct all or part of the cost in the year of purchase if eligible.
• Only equipment used more than 50% for business qualifies for accelerated deductions.
• Repairs and maintenance can be expensed immediately, but improvements or upgrades should be capitalized.
• Keep receipts, depreciation schedules, and asset registers for accurate tax reporting.