What is Furniture, Fixtures, and Equipment (FF&E)? (2024)

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Large corporations and public agencies often hire a company to purchase their furniture, fixtures, and equipment. A corporation or public agency outlines specifications for the type of FF&E it wants, and then different purchasing companies bid on the project. Sometimes the specifications have more to do with state or federal requirements than aesthetics. The San Francisco Public Safety Building specifications were focused on environmental responsibility and adhered to the San Francisco, California Environment Code. Some of the agency’s strict environmental requirements for its FF&E required that:

• All furniture was certified to meet or exceed Greenguard published emission criteria for furniture.
• No composite wood and agrifiber products contained any added urea-formaldehyde.
• No fabric flame retardants contained any Halogenates.
• No furniture and electrical components contained any PVC.
• All wood-based products, substrates, and veneers had complete and auditable Forest Stewardship Council Chain-of-Custody documentation, didn’t contain any Tropical Hardwood or Virgin Redwood nor any Arsenic-Treated Wood.

Furniture, Fixtures, and Equipment are everything but the kitchen sink...

The overall definition of FF&E is that if you remove it, it won’t damage the permanent structures and fixtures of a building. The kitchen sink, the toilet, and the faucets belong to the building, but FF&E belong to the business.

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Furniture, Fixtures, and Equipment (FF&E) describes property a business owns and uses in day-to-day business that is not attached to the building. It includes movable furniture and furniture that may be fixed to a wall, like a bookshelf, but that won’t damage the structure of a building if removed. It also includes any equipment such as computers used in a business.

Generally, if an item is essential to a business’s operations, and you can carry it out of a building when you leave, it’s most likely FF&E.

Common examples of FF&E are:

• Chairs
• Desks
• Tables
• Cabinets
• Partitions
• Lobby furniture
• Computers
• Electronic equipment
• Phones
• Drapery and blinds
• Decorative objects

Examples of items that are not considered FF&E are:

• Consumable products (food, drink, paper products, ink, etc.)
• Windows
• Doors
• Floors and tiles
• Wallcoverings
• Plumbing fixtures
• Built-in reception desks
• Other built-in woodwork

FF&E for specific businesses can also include things like beds for hospitals and hotels, currency counters for casinos and banks, or tools and compressors for mechanics and auto body shops.

The term FF&E is used in a variety of fields to describe different functions.

As an accounting term, FF&E items are combined on a separate line item under tangible assets on a company’s balance sheet to quantify their value. Something is “tangible” if it has a physical form, and you can touch it. Something is an asset if it has value.

In interior design, architecture, real estate, and construction, FF&E usually refers to the purchasing of furniture, fixtures, and equipment for a new business space, or the addition of items to an existing business space.

Furniture includes more substantial items such as movable office furniture. Fixtures are anything that may be secured, such as cubicle partitions or attached shelving, that have no permanent connection to the structure or building.

For example, a bookshelf might be secured to a wall to prevent it from toppling over, but its removal won’t damage the building structure. A faucet or toilet, however, would be considered a part of the building or premises itself and would not qualify as a fixture in terms of FF&E.

Equipment can refer to anything tangible a business uses for its operations such as computers, audiovisual equipment, phones, copy machines, wiring and devices, and any other industry-specific equipment.

FF&E purchasing, also known as FF&E procurement, is when a business furnishes and equips its business space. The business owner of a small business might purchase FF&E without assistance. But larger companies and public agencies tend to hire FF&E procurement agencies, interior designers, furniture dealers, or architects for FF&E selection or buying services.

Large corporations and public agencies often outsource FF&E purchasing because it’s easier and more efficient than doing it themselves. FF&E procurement companies are responsible for purchasing, delivering, and installing the correct items to a company’s specifications, and making any corrections for things that go wrong, such as faulty equipment or furniture that is substandard.

For example, a new hotel would have to buy many different types of furniture, such as beds, desks, and chairs. It would also have to purchase fixtures like lamps and curtains as well as equipment such as telephones, TVs, and safes. Rather than dealing with a bunch of different vendors for these items, it’s easier to hire a company to do it. An FF&E procurement company could coordinate purchases, delivery, and installation to coincide with the hotel’s opening schedule.

FF&E specifications are thorough descriptions of each item of furniture, fixture, or piece of equipment that a business wants to purchase. Whether a company uses its purchasing department or outsources the purchasing of FF&E, it needs to describe the types of items it intends to acquire in detail.

A company might create FF&E specifications through a contractor, architect, interior designer, FF&E procurement agency, or the company’s internal purchasing department. FF&E specifications have different categories. Some common specification categories are:

• Proprietary specifications: Proprietary specifications describe a specific type of manufacturer, model number, or brand and do not allow for substitutions. Proprietary specifications are typical when a company wants to add similar or exact FF&E items to those it already has.
• Prescriptive specifications: Prescriptive specifications require a particular brand or trade name for the items.
• Performance specifications: Performance specifications describe the operational requirements or the results expected from the items, such as what functions an item must perform after being installed.
• Base bid specifications: Base bid specifications may request a specific material or product type but allow for substitutions that the purchaser believes are equal in quality, materials, design, or type.
• Descriptive specifications: Descriptive specifications describe an item in terms of materials, design, and quality but do not advise of any particular brand or trade name.
• Reference standard specifications: Reference standard specifications refer to specific materials, products, or pieces of equipment based on the requirements set by certain authorities such as state and federal standards.

For accounting purposes, FF&E is categorized on its own line item under PP&E (property, plant & equipment) on a company’s balance sheet as long-term tangible assets or “fixed assets.” In accounting, “long-term” usually means more than one year, and FF&E assets generally have a lifespan of at least three years or more and depreciate over their lifespan.

Depreciation means a decline in the value of an asset over time. Accountants need to determine the depreciation of FF&E assets to be able to quantify their value as an expense over the period of years that make up their useful life.

Since fixed assets have long lifespans, accountants don’t want to write off the full expense of an asset in one year because an FF&E item is used to generate revenue for more than one year. Depreciation is a way to extend the value of a fixed asset over time so that a fixed asset’s expense matches the revenue it helps to generate in a given accounting period.

According to the IRS, FF&E items must meet the following requirements to be depreciable:

• The business must own them.
• The business must use them for income-producing activity.
• They must have a set useful lifespan.
• Their expected lifespan must be more than one year.

The most common method of depreciation is the straight line depreciation method. The straight line method deducts depreciation in equal annual amounts over the lifespan of a fixed asset.

To use the straight line method, you would first determine the amount it costs to purchase the item (aka adjusted basis). Then you’d subtract the salvage value of the item (how much the thing is worth after its useful lifespan). The IRS states that companies should estimate the salvage value of a fixed asset based upon how long its life spans is. Finally, you’d divide that figure by the number of months or years of an item’s useful lifespan.

For example, say a company purchases a new office server for $40,000. According to the IRS, Mainframe Computer Systems and Servers have a useful lifespan of seven years (84 months). The company estimates that the salvage value of the server is 10% of its purchase price. The depreciation formula would look like this:

$40,000 – (10 percent X $40,000) / 84 months$40,000 – ($4,000) / 84 months$36,000 / 84 months = $428.57 per month or $5,143 per year (rounded to the nearest dollar)

Because the useful lifespan is seven years, an accountant would deduct $5,143 from the value of the server each year for seven years on the balance sheet, until reaching the salvage value. Once the server equals the salvage value, it stays at that value on the balance sheet until it is discarded or sold.

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