What is FF&E? Furniture, Fixtures & Equipment Business Accounting Definition & Examples
If you hear the term furniture, fixtures, and equipment, of course, you may first think of things in your home, and not even consider it in a business sense. But believe it or not, it’s actually a term that’s used in accounting when it comes to analyzing the value of selling a company or a building. In this guide, we’re going to talk about the definition of this and provide you some examples of what is considered FF&E.
Does it Mean that the Items Are Attached?
In general, when it comes to building contracts, the owner of the builder or an interior designer is the one that provides this package of interior office furniture. This can also include physical items outside the building that aren’t actually attached to the building itself, for example, bike racks, recycling bins, etc. that are external, or office equipment on the inside. In order for something to be considered FF&E, it can’t have any permanent attachment to a building. Therefore, when it comes to liquidating a company or building, these items can’t be considered for the building itself, because they have their own separate value.
Are they Considered At All?
All FF&E is actually valued highly and carefully analyzed in order to find out how much they’re worth. Sometimes having FF&E can save a building from being liquidated from a company altogether and can be used in lieu of (in place of) additional costs that a company may be responsible for paying in things like a foreclosure.
What Kind of Items are Considered?
All FF&E is used in a separate price category than the actual building itself. This can be office chairs, computers, desks, cubicles that aren’t permanently attached, or even office supplies like photocopiers, office equipment like phones, or more. They’re considered in a separate line under what is called tangible assets, which mean they’re physical assets that are worth money that are in the building. Even a lounge chair in the break room of the company’s building can be considered an FF&E item. However, auditors need to determine whether a purchase of these items when buying will be less than or more than their projected budget. And after a few years, these items start to depreciate in value. And the depreciation can actually depend on the item and their lifespan is.
Conclusion: When FF&E’s Used Most
The most common type of FF&E work done is normally done when it comes to interior decoration and design. It doesn’t mean that includes things like wall finishings, windows, and things which are completely solidified to the building itself, but believe it or not, in a residential home, even the door hardware (doorknobs), and the light fixtures can be considered as FF&E, especially when it comes to a remodel. By using this term correctly, especially as a home buyer, seller, or even just as a liquidator who’d trying to get the most out of your investment, you should really consider these items a valuable asset. Many times when people buy something moveable at an auction, these items can often be included and they just count simply as an asset that can help with the return on investment.