Why depreciation is not charged on land
Explain why depreciation is not charged on land?
Expert
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.
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