what is machinary in a company ?

is machinary an asset or capital ?

2 Answer(s)


machinery is an asset to the company as it is used for the long term for the purpose of production of products


it depends.

if your company is dealing in machinery (i.e. trading in machinery like generators etc) it is inventory or a Current Asset (not a Fixed Asset).

if your company has machinery for office or factory use then it is a Fixed Asset (also called a Tangible Non-Current Asset by IFRS).

If this machinery was provided by the owner of the business it is Fixed Asset and also Capital as well. Why? Because by nature it is a Fixed Asset and this Fixed Asset was provided by the owner of this business so its part of capital. In other words the accounting double-entry will be:

Dr. Machinery A/c
Cr. Capital A/c

If this Machinery was purchase from a supplier on cash or credit then accounting entry will be:

Dr. Machinery A/c
Cr. Supplier A/c (if purchased on credit) or
Cr. Cash/Bank (if payment made at purchase)

Hope this helps. If you need more info let me know.

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