Furniture, Fixtures & Equipment - FF&E

What are 'Furniture, Fixtures & Equipment - FF&E'

Furniture, fixtures and equipment, abbreviated FF&E or FFE, are movable furniture, fixtures or other equipment that have no permanent connection to the structure of a building or utilities. These items depreciate substantially over their long-term use, but they are definitely important costs to consider when valuing a company, especially during liquidation procedures. Examples of FF&E include desks, chairs, computers, electronic equipment, tables, bookcases and partitions.

BREAKING DOWN 'Furniture, Fixtures & Equipment - FF&E'

Accountants compile all of the FF&E into a separate line item in a budget or a financial statement under tangible assets. FF&E go into a project's final cost so an auditor can determine if a purchase comes under budget or over budget. FF&E generally have a life span of three years or more.

Criteria

An asset goes into the FF&E category if it is used by a business to conduct its normal, daily operations. A chair for the front desk person at an office building counts as an FF&E item because the employee needs the chair to perform daily tasks to keep the business running smoothly. The telephone sitting on the desk is categorized the same way; the administrative assistant cannot function without answering the phone and forwarding calls. The person's computer, printer, filing cabinet, desk organizer and pen holder all count in the FF&E category when determining how much these assets are worth.

The Federal Reserve lists several types of FF&E it uses for its normal operations. Automotive equipment, such as trucks, cars and tractors, fall into this category. Material handlers, fork lift trucks, drill presses and currency counters are all equipment this agency uses on a regular basis. Security equipment, such as X-ray scanners, biometric devices, magnetometers and access control devices, fall into this category because Federal Reserve staffers can move this equipment out of the building.

Depreciation

Financial officers determine depreciation of FF&E in several ways. The first rule of thumb is to examine the useful life of the item. A chair may last 20 years, but a desktop computer's life could end after three years when the company needs newer technology.

The Federal Reserve uses the straight-line method of depreciation to determine the value of FF&E items. This means the formula is a straight line. In this case, the Federal Reserve takes the cost minus the salvage value and then divides the total by the estimated useful life, in months, to arrive at a monthly depreciation charge. Depreciation continues until an item's useful life is reached.

As an example, a car is worth $10,000 new, and its useful life is three years. The maximum salvage value of the vehicle is 20%. When the agency first buys the car, the monthly charge is $10,000 minus $2,000 divided by 36. The final total is $222.22 at the end of the first month. The book value of the car changes each month, so the Federal Reserve uses new values every month to ascertain its value for accounting purposes.

RELATED TERMS
  1. Shell Lease

    A commercial lease in which a tenant rents a property with an ...
  2. Depreciable Property

    Any type of asset that is eligible for depreciation treatment. ...
  3. Business Asset

    A piece of property or equipment purchased exclusively or primarily ...
  4. Depreciation

    1. A method of allocating the cost of a tangible asset over its ...
  5. Fully Depreciated Asset

    A property, plant, or piece of equipment which, for accounting ...
  6. Salvage Value

    The estimated value that an asset will realize upon its sale ...
Related Articles
  1. Fundamental Analysis

    What's a Tangible Asset?

    Tangible assets are property owned by a business that can be touched -- they physically exist. Examples include furniture and fixtures, computer hardware, delivery equipment, leasehold improvements ...
  2. Investing

    What's Salvage Value?

    Salvage value is the amount a company expects to receive from the sale of an asset at the end of that asset’s useful life. Salvage value plays a part in the depreciation calculation of an asset, ...
  3. Active Trading

    An Introduction To Depreciation

    Companies make choices and assumptions in calculating depreciation, and you need to know how these affect the bottom line.
  4. Forex Education

    Depreciation: Straight-Line Vs. Double-Declining Methods

    Appreciate the different methods used to describe how book value is "used up".
  5. Term

    Explaining the Declining Balance Method

    The declining balance method is a system for calculating an asset’s rate of depreciation against its non-depreciated balance.
  6. Economics

    Double Declining Balance Depreciation Method

    The double declining balance depreciation method counts the depreciation of a long-lived asset’s book value at double the rate of its straight-line depreciation.
  7. Investing

    What's a Fixed Asset?

    Fixed assets are tangible property that a business uses in the process of producing income. To qualify as a fixed asset, the item cannot be consumed or sold in less than a year. Fixed assets ...
  8. Markets

    Book Value: How Reliable Is It For Investors?

    In theory, a low P/B ratio means you have a cushion against poor performance. In practice, it is much less certain.
  9. Options & Futures

    Investing In Medical Equipment Companies

    Learn the basics about medical equipment companies and how investing in them can benefit growth and value investors alike.
  10. Economics

    Understanding Carrying Value

    Carrying value is the value of an asset as listed on a company’s balance sheet. Carrying value is the same as book value.
RELATED FAQS
  1. Is depreciation only used for tangible assets?

    Learn if tangible assets can be depreciated, as well as what other assets are eligible for depreciation so you can account ... Read Answer >>
  2. What are the different ways to calculate depreciation for tangible assets?

    Learn what depreciation is and how to calculate it using the straight line method, declining balance method, and the sum-of-the ... Read Answer >>
  3. How is salvage value used in depreciation calculations?

    Learn how an asset's salvage value is subtracted from its initial cost to determine the amount by which an asset is depreciated ... Read Answer >>
  4. What are some examples of the main types of capital expenditures (CAPEX)?

    Learn about different expenses with acquiring assets that are considered capital expenditures and should be depreciated over ... Read Answer >>
  5. What are the different types of tangible assets?

    Learn what tangible assets are, what other names they are called, what specific items are included and how they are handled ... Read Answer >>
  6. Are noncurrent assets depreciated?

    Learn about depreciation, why noncurrent assets are depreciated and how to calculate depreciation expenses using a straight-line ... Read Answer >>
Hot Definitions
  1. Reverse Mortgage

    A type of mortgage in which a homeowner can borrow money against the value of his or her home. No repayment of the mortgage ...
  2. Labor Market

    The labor market refers to the supply and demand for labor, in which employees provide the supply and employers the demand. ...
  3. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  4. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  5. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  6. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
Trading Center