PROPERTY, PLANT AND EQUIPMENT.
Equipment accounting holds three separate questions and most contractors answer only the first. Capitalize or expense decides whether a purchase becomes an asset on the balance sheet or a cost against this month's profit. Depreciation then spreads that asset's cost across the years it works, which is a book entry rather than a payment. And the third question, the one that decides margin, is whether any of that cost ever reaches a job through an ownership rate. A machine you already own can cost a job nothing on the report while it costs the company several hundred dollars a day, and that's a job costing failure rather than an accounting one.
The reason this stays broken is that the accounting treatment and the job costing treatment answer to different people. Your CPA needs the asset on the balance sheet and the depreciation on the return, and that work is theirs. Your estimator needs an hourly or daily rate covering ownership so the bid doesn't give the iron away. Neither one produces the other, and a contractor who assumes the tax return took care of it will bid the next job with an equipment cost of zero. Everything on this page is accounting and job costing treatment. The elections, the schedule, and the tax outcome are your CPA's call and not ours.
WHAT IT MEANS.
Property, plant and equipment is the long lived assets a contractor owns and uses to produce work, recorded on the balance sheet at what was paid for them and written down across the years they're used rather than expensed in the month they were bought.
A written capitalization policy is what keeps the decision consistent. It sets a dollar threshold and an expectation of useful life, so a small tool is expensed and a machine is capitalized without anybody deciding case by case at the moment the invoice comes in. Set the threshold with your CPA, because it interacts with the return, then write it down so your bookkeeper isn't making the call alone. Repairs that keep a machine running are expenses. Work that extends its life or adds capability is usually capitalized as an improvement, and that line is worth agreeing on in advance and not in an audit.
The other half of PP&E is what it does to the statement an outsider reads. Expensing everything understates the assets, which understates equity, which is one of the two figures a surety and a bank size a program off. Capitalizing everything and never reviewing the schedule leaves machines on the books that were sold or scrapped years ago, which overstates it. Neither reads well, and both are fixed by the same thing, which is a fixed asset schedule that gets touched more than once a year.
THREE WAYS EQUIPMENT GOES WRONG.
Everything gets expensed, so the balance sheet understates the company
A machine bought and run through the profit and loss in the month of purchase wrecks that month's result and leaves nothing on the balance sheet afterward. Equity reads lower than the business is worth, which is one of the two figures a surety uses to size a bonding program. The purchase was fine. The recording of it cost you capacity you didn't know you had given up.
Depreciation is treated as if it were money
Depreciation is an accounting entry that reduces reported profit without any cash leaving the building, and a replacement reserve is cash genuinely set aside. They aren't the same thing and one doesn't create the other. Contractors who read the depreciation line as a savings account find out at replacement time, when the machine is worn out and the money that supposedly covered it was distributed years ago.
Owned equipment costs the job nothing
Rented equipment reaches a job because an invoice forces it to. Owned equipment has no invoice, so unless an internal rate is charged, the job report shows a machine that worked for free. Ownership cost runs whether the iron works or is parked, roughly $200 a day for a CAT 330 sitting still, at industry idle rates near 30 percent. The bid gave that away and the job report will never say so.
WHAT IT LOOKS LIKE IN DOLLARS.
Ownership cost runs whether a machine works or not. A CAT 330 excavator carries roughly $200 a day in ownership cost parked, and industry idle rates average around 30 percent across the industry. A bid built without an ownership rate gives that money to the project owner, and no report will ever flag it as a loss, because the cost never posted to a job in the first place.
Take a machine expected to be replaced for $180,000 after five working seasons of 1,200 billable hours each. Spread the replacement across those 6,000 hours and it's $30 an hour of replacement recovery, before insurance, storage, interest, and maintenance are added on top. Every figure in that example is illustrative arithmetic rather than a benchmark, and it's a replacement recovery calculation rather than a depreciation schedule. The rate for your fleet comes from your own replacement costs and your own billable hours.
HOW IT GETS RECORDED AND CHARGED.
One threshold, one rule on repairs against improvements, written down and applied every time. The bookkeeper stops guessing, the CPA stops reclassifying at year end, and the balance sheet stops moving for reasons that have nothing to do with the business. Because the threshold interacts with the return, your CPA sets it and we apply it.
Additions get recorded when they happen and disposals get removed when the machine leaves, rather than both being reconciled once a year against a tax return. The schedule is what a bank and a surety read the asset side off, and a schedule carrying equipment that was sold two years ago is a credibility problem you don't want to explain in an underwriting meeting.
Each machine gets an hourly or daily rate covering depreciation, interest, insurance, storage, and a replacement component, and that rate posts to the job that used it. Billed hours then get compared against the rate monthly. If a machine can't earn its rate, you now have the information to sell it, and if the rate was never built you never had it.
We report them separately and we say which is which, every month. Depreciation belongs to the profit and loss and the tax return. The replacement reserve belongs to the balance sheet and the bank account, funded out of what each machine bills. One of the two is what buys the next machine, and it's not the one on the tax return.
THE OUTPUTS, NAMED.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing, no payroll, and no add-ons.
Pricing
| Last 12 months revenue | Monthly fee |
|---|---|
| Up to $1M | $1,900 to $2,900 |
| $1M to $3.5M | $2,600 to $3,900 |
| $3.5M to $6.5M | $3,800 to $5,700 |
| $6.5M to $9.5M | $5,100 to $7,100 |
| $9.5M to $12.5M | $6,100 to $8,500 |
| $12.5M to $15.5M | $7,400 to $11,000 |
| $15.5M to $18.5M | $9,400 to $13,500 |
| $18.5M+ | Quoted individually |
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions rather than a report.
Your bookkeeper keeps doing the books.
You stop touching the books.
Everything in Core, and we run the bookkeeping and the controllership as well. Nobody in your office is answering coding questions or chasing a reconciliation at month end.
We do the books. No payroll.
Every job shows its margin while it's still running.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the job costing.
FREQUENTLY ASKED.
