1. 1 Chapter 27 Furniture, Fixtures, and Equipment FFE

2. 2 FFE as Capital Items  Capital items are long-life items.  Most capital items are depreciable assets  Typically, the cost of many FFE items cannot be used as tax deductions in the year they were purchased.  Value is depreciated over a period of years

3. 3 Management Considerations  Effect of future plans might have on the need for FFE  Obsolescence  Capitalizing an operating expense  Operational savings  Persons involved –User(s) –Owner-manager(s) –Buyer(s) –Consultant(s)

4. 4 General Procedures in FFE Purchasing  Is replacement necessary?  Visiting trade shows  Financing and the need to obtain competitive bids

5. 5 The FFE Specification  Similar in scope to other specifications  Supplier services are very important –Instructions to bidders –General conditions –Specific conditions –Detailed drawings

6. 6 Selection Factors  Intended use  Exact name  Lifetime cost  Potential operating savings  Direct purchase  Demonstration models  Equipment programs  Custom FFE  New vs. used

7. 7 Selection Factors, Cont.  Versatility  Compactness  Compatibility  Appearance  Brand name  Portability  Ease of cleaning  Ease of maintenance  Degree of automation  Availability of replacement parts

8. 8 Selection Factors, Cont.  Supplier services  Employee attitude and skill level  Energy source  Excess capacity  Add-on capabilities  Warranty  Code compliance

9. 9 The Purchase of FFE  Cash  Installment Credit

10. 10 Copyright ©2008 John Wiley & Sons, Inc.