What does Gross PPE represent on the balance sheet?

What does Gross PPE represent on the balance sheet?

• A. Original purchase cost
• B. Net of depreciation
• C. Ending PPE
• D. Accumulated depreciation

Answer: (A)

Gross PPE is the original purchase cost of property, plant, and equipment before any depreciation is subtracted. It represents the historical amount paid to acquire or construct the asset, including costs to bring it to use (like delivery and installation). Depreciation then reduces this gross amount over time to arrive at net PPE, which is what’s typically shown on the balance sheet. So, the original purchase cost is the best fit. Net of depreciation would be the balance after depreciation; ending PPE is usually the net amount; accumulated depreciation is the separate contra account that reduces gross PPE.

Gross PPE is the original purchase cost of property, plant, and equipment before any depreciation is subtracted. It represents the historical amount paid to acquire or construct the asset, including costs to bring it to use (like delivery and installation). Depreciation then reduces this gross amount over time to arrive at net PPE, which is what’s typically shown on the balance sheet.

So, the original purchase cost is the best fit. Net of depreciation would be the balance after depreciation; ending PPE is usually the net amount; accumulated depreciation is the separate contra account that reduces gross PPE.