A corporation spent $10,000 in cash to purchase a $30,000 piece of equipment. This transaction resulted in a debit to Equipment of $30,000, a credit to Cash of $10,00, and a credit to Notes Payable of $20,000.
A form of fixed asset called equipment is reported on the balance sheet under the line item "property, plant, and equipment" transaction in the long-term assets section. Equipment is used by a corporation in its operational processes.
Simply explained, equipment is a capital expenditure that a corporation makes to carry out a certain activity for the organization. In a machine shop, a drill press or a vehicle lift might be transaction used for this. Other examples include tools, both hand and power, and/or technical equipment. All of these assets are not regarded as liquid assets since they are difficult to sell or convert into cash over the long term.
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