It's very common to see both gross PP&E and net PP&E being displayed on a balance sheet If you look into the footnotes, you'll often see both as well So what are they? And how are they linked? Well here we have an example from financial statements extract The property, plant and equipment here says that it's at cost Land is shown at a value of 25,000 (that is how much it was purchased for) Buildings were purchased for 49,470. And lastly plant and equipment were purchased for 100,530 Now if you add all of them up, they come to 175,000 and that key term now comes in: gross property, plant and equipment So gross means the original cost of something The original cost of the PP&E that we purchased, that we've still got is 175,000 Okay, that's quite interesting, it's a nice bit of detail but that may have been 10 year ago Why is that of any use to me today? What I'd much rather know is the value of the plant, property and equipment today The book value, the amount that it's carried in our financial statements at So what I need to do, is I need to take off the depreciation that's occurred between the original purchased and now And that is the accumulated depreciation So here we've got accumulated depreciation of 121,976 Let's say we purchased the PP&E 10 years ago and that's 10 years of depreciation Oh okay, so if we take that off, we now get to book value or carrying value today The name more commonly that we see for that is net PP&E So net PP&E is your book value or carrying value And in this example it's 53,024 Now very very important to realize, is that it is the net property plant equipment which is included in balance sheet subtotals Even though you'll often see the gross amount being reported in the balance sheet as well It's the net figure that's actually going into the balance sheet The gross is just there as a little bit of extra detail to help you understand the net figure So the net should be your focus