Why don't calculate the depreciation on Land & Devlopment.?
Explain.
Answer Posted / h.r. sreepada bhagi
Depreciation is charged on the long term tangible assets
(Fixed Assets), over the period of it's useful life, due to
limited life and the value of the asset will come down due
to usage, effluction of time, obsolescence, etc. Since the
benefit of using these assets is spread over several years
the cost is also reasonably apportioned to more than one
accounting period.
This assumption is true in case of all assets except land.
Generally, the life of land is not limited (it's eternal or
perpetual)and it's value is not expected to come down &
hence as a general rule depreciation is not allowed on land.
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