Equipment is considered to be a __________, and with some equipment being at a lower price, it is up to the individual organization as to how they record the equipment.

• A. short-term liability
• B. long-term liability
• C. short-term asset
• D. long-term asset

Answer: (D)

Equipment is a long-term asset because it is a tangible resource used in operations that provides value over more than one year. On the balance sheet, it falls under property, plant, and equipment and is typically depreciated over its useful life. Some organizations set a capitalization threshold, so very low-priced items might be expensed rather than capitalized, but that policy choice does not change the fundamental classification of equipment as a long-term asset when recorded as such. This distinguishes it from short-term assets that are expected to be converted to cash or used up within a year, and from liabilities, which are obligations.