Why is there no depreciation for land?

sheep by A. Roger Davies

Short Answer:

Land generally does not depreciate in value because it is a limited resource with an
infinite life and can be used for a range of purposes.

Explanation:

All assets wear out and eventually cease to exist, except land. Land is not considered to ever be able to be destroyed, so it can’t lose value and go down to zero value like other assets.

The land generally retains or increases in value  Over the long term, land will go up in value over because the demand is always increasing, while they are not “making” any new land.

If there is something built on the land which the business owns,  the accountant has to subtract the cost of the land from the overall cost of the property in order to determine the depreciation expense for the buildings,

  • Anshul

    Nice Answer

  • eshie

    brilliant man

  • Hareesh

    Land has no depreciation bcoz its values doesnot decreased. So we can charge appreciation to Land bcoz of its increasing value..:)
    Hareesh Parakkal from Shornur..

  • llF4

    Good answer

  • Ashwani Kumar

    but building?

  • Hareesh

    We charged depreciation for Building bcoz there is chance for damages. I think so..:)

  • Ferig Ogzide

    Except when that property is prone to natural disasters like flooding,earthquakes,ecological hazards like mass mosquito breeding grounds or even government sanctioned ones like being near radio active facilities,garbage dumps,sewage plants etc.
    The demand for such places fall ,hence depreciation can occur.

  • sulaiman

    Dear hareesh: but, what if your using a land for the purpose of agriculture then shall we calculate depreciation expense or not.