--%>

Why depreciation is not charged on land

Explain why depreciation is not charged on land?

E

Expert

Verified

The land doesn’t get depreciated. The cause being that the depreciation is assumed to be the reduction in the value of an asset since of:

i) Usage, 
ii) Extraction, 
iii) Obsolescence and so on.

Either the capital asset is employed and can no more give as much level of output or a few asset from which minerals, coal and so on are extracted are getting exhausted or a few technology and so on are getting obsolete therefore they are depreciated.

The land is not subject to either of the stuff. The market value of the land might go down since of seasonal reasons, however land can’t get depreciated.

   Related Questions in Financial Accounting

  • Q : Holding Period Describe the term

    Describe the term Holding Period?

  • Q : Abatement The process of allocating the

    The process of allocating the arrears of estate assets to the distributions. Distributions from the estate proceed in a particular order starting with specific legacies, effusive legacies, general legacies, and finally residuary legacies. If legacies assets are not capable to meet the will's prov

  • Q : Calculating Average Cost 1 You're

    1 You're trying to save to buy a new $200,000 Ferrari. You have $40,000 today that can be invested at your bank. The bank pays 5.5 percent annual interest on its accounts. How long will it be before you have enough to buy the car? 2 Although appealing

  • Q : Global expansion Write an article on

    Write an article on Global expansion's strategy followed during 1990.

  • Q : Multiplicity-Creativity as process

    Define the term Multiplicity (Creativity as process) in creative industry ? And also state the different personality traits and intellectual aptitudes which might contribute to creative thinking ?

  • Q : Architectural Symbolism-house-style

    Wriet a report on the term Architectural Symbolism:a study of house-style meanings ?

  • Q : Credit Claims How to handle the Credit

    How to handle the Credit Claims?

  • Q : Commercial bank problems Select the

    Select the right answer of the question. Assume that, for every 1-percentage point decline of the discount rate, commercial banks collectively borrow an additional $2 billion from Federal Reserve banks. Also suppose that reserve ratio is 20 percent. If the Fed incre

  • Q : Investment in Value trust What is your

    What is your recommendation concerning investment with/in the Value Trust? a.  Why do you recommend? b.  Why don’t you recommend?

  • Q : Parallel and back-to-back loan

    Distinguish between the parallel loan and the back-to-back loan.