Land is not depreciated because land is assumed to have an unlimited useful life.

Other long-lived assets such as land improvements, buildings, furnishings, equipment, etc. have limited useful lives. Therefore, the costs of those assets must be allocated to those limited accounting periods. Since land’s life is not limited, there is no need to allocate the cost of land to any accounting periods.

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About the Author: Harold Averkamp (CPA) has worked as an accountant, consultant, and university accounting instructor for more than 25 years.

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